Preamble

The House met at Half past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

DUNDEE CORPORATION ORDER CONFIRMATION BILL

"to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1936, relating to Dundee Corporation," presented by Mr. Westwood; and ordered (under Section 7 of the Act) to be considered Tomorrow, and to be printed. [Bill 97.]

INVERNESS BURGH ORDER CONFIRMATION BILL

"to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1936, relating to Inverness Burgh," presented by Mr. Westwood; and ordered (under Section 9 of the Act) to be read a Second time upon Thursday, 17th July, and to be printed. [Bill 98.]

PROXY VOTING (PETITION)

Viscount Hinchingbrooke: I beg to ask leave to present a Petition on behalf of 71 British women, known as "B.A.O.R. Wives, Daughters and Sisters, aged 21 and Over." The Petition showeth that after two months' residence overseas, the Petitioners are not eligible for inclusion in the next Register of Electors, which comes into force on 13th October, 1947, and, therefore, lose their right to vote in general, borough and municipal elections at home. Wherefore, the Petitioners pray that they be granted the privilege accorded to their men-folk, and to enfranchised women in the Services overseas; that is to say, the same power to nominate a suitable person in Great Britain and Northern Ireland who will record their votes by proxy. The Petition concludes with the appropriate Prayer.
Petition to lie upon the Table.

Oral Answers to Questions — POST OFFICE

Registered Envelopes (Shortage)

Mr. W. J. Brown: asked the Postmaster-General if he will make a statement about the shortage of registered envelopes.

The Postmaster-General (Mr. Wilfred Paling): It has for some time been difficult to meet the demand for registered letter envelopes, which is about double what it was before the war, and the fuel crisis resulted in a serious fall in output which is only now being overtaken. Everything practicable is being done by my Department and the contractors to overcome the present shortage, and I am hopeful that the position will be satisfactory within the next few weeks.

Mr. Brown: Is the Minister aware that the position has improved since I put down this Question?

Mr. Paling: Yes, Sir.

Delayed Delivery, Hillington

Mr. Rankin: asked the Postmaster-General if he is aware that a package posted by the Hillington works of Mirrless Engineers, Limited, on Thursday, 26th June, just after 5 p.m., was delivered at their Scotland Street works, three miles away, on the morning of 30th June; and if he can give any reason for this delay.

Mr. Wilfred Paling: I am sorry for the delay in this case. I am not satisfied with the treatment of this packet. I am making inquiry and will write to my hon. Friend.

Mr. Rankin: Is the right hon. Gentleman aware there is a feeling that the position has been aggravated by the dismissal of temporary postmen?

Mr. Paling: I do not think these two things are associated.

Air Mail Stamps

Dr. Segal: asked the Postmaster-General for what reasons he is unwilling to sanction an issue of air mail stamps.

Mr. Wilfred Paling: Special air mail stamps do not offer any advantage in the treatment of air mail correspondence which would balance the additional work and expense of producing, stocking and issuing them.

Dr. Segal: Has the right hon. Gentleman any means of assessing the loss in dollars to this country arising out of his decision?

Mr. Paling: No, Sir.

B.B.C. (Third Programme)

Dr. Segal: asked the Postmaster-General why reception of the B.B.C. Third Programme is so difficult in many foreign countries and British territories overseas; and what steps he proposes to improve it.

Mr. Wilfred Paling: The Third Programme of the British Broadcasting Corporation is intended for listeners in this country and the transmitting arrangements are designed to that end and not for reception overseas. Items from the Third Programme are, however, included as opportunity offers in the programmes broadcast by the Corporation for reception overseas.

Dr. Segal: Is the right hon. Gentleman aware that there is a very widespread demand existing abroad for the Third Programme, and that its better diffusion would help enormously to assist the good work now being carried out by the British Council?

Mr. Paling: Yes, Sir, but one of the troubles is shortage of wavelengths.

TELEPHONE INSTALLATIONS (MIDWIVES)

Mr. Symonds: asked the Postmaster-General, if he will include, in the category of those entitled to priority in the installation of telephones, certified mid-wives whose houses are registered as nursing homes.

Mr. Wilfred Paling: Certified midwives are given priority whether or not their houses are registered as nursing homes.

Mr. Symonds: If I bring to my right hon. Friend's notice a particular case where this has not been done will he look into it?

Mr. Paling: Certainly.

Oral Answers to Questions — ROYAL AIR FORCE

Allowances, Greece

Sir Wavell Wakefield: asked the Secretary of State for Air if he has consulted with the War Office and the Admiralty on the hardships caused to air personnel due to inadequate allowances because of the present rate of exchange between drachma and sterling; and with what result.

The Secretary of State for Air (Mr. Philip Noel-Baker): The allowances given to members of the Armed Forces stationed in Greece were last reviewed in December, 1946; since then, the Air Ministry have received no representations on the matter. The Service Departments are now awaiting a report from the Commanders-in-Chief in the Middle East, and the rates will be reviewed again when it has been received.

Sir W. Wakefield: Will the right hon. Gentleman give an assurance that immediately these representations are received they will be quickly reviewed, so that further delay and hardship will not occur?

Mr. Noel-Baker: I will certainly give that assurance, and I hope that the hon. Member will help me to dispel the misapprehension in Greece that there has been a long delay and injustice as between the Services, the Embassy, and the Economic Mission. There has been no such thing.

Sir W. Wakefield: Is the right hon. Gentleman aware that there is a feeling that there has been long delay, that misapprehension exists in Greece, and that the best way to remove it is to deal with this matter quickly?

Mr. Noel-Baker: Yes, Sir, and I am asking the hon. Gentleman to help me to remove that misapprehension. There has been no discrimination in favour of the Embassy and the Economic Mission, and there has not been a long delay.

Aerodromes, Blackbushe and Lasham

General Sir George Jeffreys: asked the Secretary of State for Air what is the position as regards the retention or otherwise of Blackbushe and Lasham


aerodromes; whether Blackbushe aerodrome is now to be released; and if there is any necessity to retain Lasham which is situated on good agricultural land and from which very little flying is now done.

Mr. P. Noel-Baker: The aerodrome at Lasham is required by the R.A.F., and must, therefore, be retained. The aerodrome at Blackbushe is equipped with F.I.D.O., and will be used by civil aircraft for at least some years to come.

Oral Answers to Questions — CIVIL AVIATION

Brabazon Committee (Reports)

Mr. Geoffrey Cooper: asked the Parliamentary Secretary to the Ministry of Civil Aviation what steps he proposes to take to publish the reports of the Brabazon Committee since it was set up on 23rd December, 1942.

The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. Lindgren): It is not proposed to publish the reports of the Brabazon Committee, the outcome of whose recommendations has been made known from time to time in Parliament.

Mr. Cooper: Since the Brabazon Committee is an official Committee and has, presumably, involved a certain amount of public expense, and in view of the serious position in regard to the development and construction of new civil aircraft designs, is it not appropriate that we should have the details of the matters with, which this Committee has dealt?

Mr. Lindgren: The reports are confidential and publication of some of the information would not be to the national advantage. But such information as is available is made known to the House from time to time by the Department.

Operational Statistics (Publication)

Mr. Cooper: asked the Parliamentary Secretary to the Ministry of Civil Aviation, when he anticipates being able to publish, with complete detail, full statistics of operations for the three civil aviation corporations and charter airlines, similar to those which are published monthly by the Civil Aeronautics Administration in the U.S.A.

Mr. Lindgren: The necessary preparatory work is proceeding for the monthly publication of detailed civil air transport statistics, but I regret that I am not at present in a position to give a definite date when publication will commence.

Mr. Cooper: Will my hon. Friend see that when the details are published they will give the fullest information, not only about the operations of the civil airways corporations, but the operations of the charter companies, to ensure that they do not exceed the sphere of their activities, as limited by the Civil Aviation Act?

Mr. Lindgren: My hon. Friend will know that P.I.C.A.O. is dealing with the general question of fares and statistics. I can assure him that we shall honour P.I.C.A.O. recommendations to the full, but charter statistics are not so easy to obtain.

Sir W. Wakefield: Is the hon. Gentleman getting all the information he wants from the charter companies? Are they being co-operative?

Mr. Lindgren: They are being most co-operative but, naturally, they do not want to disclose to competitors figures which might be likely to embarrass them in their trading undertakings.

Prestwick Airport

Colonel J. R. H. Hutchison: asked the Parliamentary Secretary to the Ministry of Civil Aviation how many Atlantic arrivals and departures, to and from Prestwick, took place during the month of June by British and foreign airlines.

Mr. Lindgren: In the month of June, there were 58 arrivals and 60 departures to and from Prestwick Airport on Transatlantic services by British airlines; there were 54 arrivals and 56 departures by foreign airlines.

Sir Peter Macdonald: Can the hon. Gentleman say the number of passengers carried in each plane?

Mr. Lindgren: I cannot at the moment. Perhaps the hon. Member will put a Question on the Paper.

Colonel J. R. H. Hutchison: asked the Parliamentary Secretary to the Ministry of Civil Aviation, when work on the third runway for Prestwick may be expected to start.

Mr. Lindgren: No target date for starting work on a third runway additional to the two provided by the Government during the war, and now in use for Trans-Atlantic and other services, can be given at present. Various alternative schemes have been examined from a technical and engineering standpoint, but additional information on a number of points is still awaited. Any practicable scheme seems likely to be costly, both in labour and expense. This factor must affect the timing of the work, although my noble Friend is concerned to ensure that its execution shall be in phase with the probable needs for such a development of the aerodrome.

Colonel Hutchison: Will the hon. Gentleman press this matter, as local authorities' housing schemes and many other desirable improvements are being held up by indecision on this important question?

Mr. Lindgren: Yes, Sir. The matter is now being discussed by the Minister and the Secretary of State for Scotland.

Mr. Gallacher: Can the hon. Gentleman say when Scottish-built aeroplanes will use these runways?

Departmental Committees (Membership)

Mr. Cooper: asked the Parliamentary Secretary to the Ministry of Civil Aviation in connection with the various committees on civil aviation set up in the Ministry, on what grounds is a distinction made between a Departmental or inter-Departmental committee, the names of the members of which he declines to publish, and an advisory or co-ordinating or technical committee whose members' names he does customarily publish.

Mr. Lindgren: The 'reason for this distinction is the well recognised usage of preserving the anonymity of individual civil servants as far as possible

Mr. Cooper: Could my hon. Friend say whether, in the case of the Self Committee, there are members who are not civil servants, and whether it will be possible to publish their names?

Mr. Lindgren: Yes, Sir, but in a Committee such as the Self Committee, in which there is joint representation, it would still be undesirable. Ministers are responsible for policy, and it is preferable that controversy should range round the

Minister rather than civil servants, who are advisers of the Minister

Maintenance Services (Spare Parts)

Sir W. Wakefield: asked the Parliamentary Secretary to the Ministry of Civil Aviation what steps are being taken to ensure that an adequate service of spare parts is readily available for the maintenance of civil aircraft so that unnecessary delays of several days, such as that caused to B.E.A.C. aircraft scheduled to leave Athens on Saturday, 10th May, but delayed until Friday, 16th May, and the consequent inconvenience caused to passengers, will in future be avoided.

Mr. Lindgren: The maintenance of their aircraft is a matter for the management of the three statutory British Airways Corporations and they, like other operators, place their orders for spares direct with the manufacturers.

Sir W. Wakefield: Is it not the responsibility of the Minister to see that the service of spare parts to this Corporation is satisfactory? Is he aware that it took nearly a week for the small spare part to reach Athens from England? Is not that disgraceful?

Mr. Lindgren: When we are appealed to by either the Corporation, or the charter companies, we give every assistance. This case concerned a Dakota aircraft, for which spares are often secured only by "cannibalisation." The general position in regard to spares for Dakota aircraft is very difficult.

Sir W. Wakefield: Is not the hon. Gentleman aware that the spare part in this case was available in Britain, and that it took nearly a week to get to Athens, when aircraft were flying there every day?

Mr. Lindgren: I am not aware that that is in accordance with the facts.

Air-Commodore Harvey: Will the hon. Gentleman consult the Ministry of Supply, and review the whole question of spares for aeroplanes and tool kits? Is he aware that new British aircraft are not supplied with tool kits when going abroad?

Mr. Lindgren: That matter is being discussed by the Minister and the Ministry of Supply.

Mr. William Shepherd: Can the hon. Gentleman say whether the arbitrary limit, in terms of dollars, for spare parts for Dakotas still exists?

Mr. Lindgren: The limit still exists, but the trouble is the actual availability of spares for an obsolete type of aircraft.

Director of Amenities

Sir John Mellor: asked the Parliamentary Secretary to the Ministry of Civil Aviation what are the duties and salary of the Director of Amenities; and what staff assist him in his work.

Mr. Lindgren: The Director of Amenities is responsible at the Ministry of Civil Aviation for the development and improvement of existing amenities and for the introduction of further revenue producing concessions and facilities at State-owned aerodromes in the United Kingdom. His salary is £1,320 a year. His staff will not be settled pending completion of his initial survey of the problem. It will, in any event, be small.

Airfields (State Acquisition)

Mr. Beswick: asked the Parliamentary Secretary to the Ministry of Civil Aviation whether he is now in a position to state what airfields in the United Kingdom are to be acquired by the State for civil aviation.

Mr. Lindgren: A preliminary list of these airfields has now been prepared and I will, with permission, circulate a statement in the OFFICIAL REPORT.

Major Bruce: Can the Parliamentary Secretary say for how long this country is to be without an international marine airport conforming to modern standards?

Mr. Lindgren: That is an entirely different question.

Mr. Walkden: When the report is circulated will it be possible for the Parliamentary Secretary to indicate what the development is likely to be, and whether these airports to be taken over will become derelict by reason of non-activity, which seems to be forecast in official circles?

Mr. Lindgren: No, Sir. No actual date can be given. Much depends on the availability of labour and materials, but no airport will be allowed to become dere-

lict pending the bringing into operation of fuel services.

Air-Commodore Harvey: Will the Parliamentary Secretary in his report show which aerodromes have been paid for by the Government when they acquire them?

Mr. Lindgren: This is an intention to acquire. Some have already been acquired; others come under an intention to acquire.

Following is the statement:

In the White Paper on British Air Ser vices published in December, 1945, it was announced that the State would own and operate the aerodromes used by regular air transport services. The selection of suitable sites for these aerodromes is and will continue to be a long and difficult task. It has been and is being undertaken in close consultation with British European Airways with the object of providing for the country a planned network of air services designed to serve the nation's needs.

A preliminary list of aerodromes outside the London area, which area needs to be considered separately and to which this note does not therefore refer, has now been prepared as set out below, together with the names of the main towns which each aerodrome is intended to serve. Many of the aerodromes will be used on a joint basis with the Service Departments and aircraft manufacturers. Much work has to be done to many of these aerodromes before they can be ready for the operation of regular air services and, in addition, it will, of course, be necessary, where this has not already been done, to extend to them the network of radio and air traffic control services.

The object is to provide safe and regular services and not to rush aerodromes and aircraft into ill-prepared use. Services, when they are introduced, must be dependable and, generally speaking, those which fill a social or commercial need that other forms of transport do not satisfy, must be introduced first. Bearing these facts in mind, together with the shortages of manpower and materials, particularly for building purposes, it would be unwise to attempt to indicate a date by which the whole of these aerodromes will have been brought into use, but the work will be pressed ahead on a properly integrated plan.

Locality.
Aerodrome.
Remarks.


Aberdeen
Dyce
Already in use by regular services.


Anglesey
Valley
Diversionary airport.


Barra
Barra
—


Barrow
Barrow
—


Belfast
Nutts Corner
Already in use by regular services.


Benbecula
Benbecula
Already in use by regular services.


Blackpool
Squires Gate
Already in use by regular services.


Birmingham
Elmdon
—


Bournemouth
Hum
—


Brighton, Hove and Worthing.
Shoreham
—


Bristol
Lulsgate Bottom
Whitchurch will continue to be available at any rate for a time.


Cardiff
(1) Pengam Moors
Pengam Moors will continue to be used tor the ferry services across the Bristol Channel.



(2) Llandow
—


Campbeltown
Machrihanish
Already in use by regular services.


Carlisle
Great Orton
Crosby is being used temporarily by regular services.


Edinburgh
Turnhouse
Already in use by regular services


Glasgow and Clydeside
Renfrew
Already in use by regular services.


Hull
Catfoss
—


Inverness
Dalcross
Longman aerodrome is being used at present by regular services but transfer to Dalcross will be made as soon as practicable.


Isle of Wight
Ryde
—


Islay
Port Ellen
Already in use by regular services.


Kirkwall
Hatston
Already in use by regular services.


Leeds and Bradford
Yeadon
Subject to further technical investigation showing that the aerodrome can be improved to the necessary standard.


Liverpool
Speke
Already in use by regular services.


Manchester
Ringway
Already in use by regular services.


Newcastle and North- East England.
New site
Croft is intended for temporary use pending the development of a new site. The site provisionally selected is at Boldon south of the projected Tyne Tunnel. It lies however on coal-bearing land and further technical investigation is necessary before the selection of the site can be confirmed


North Uist
Sollas
—


Nottingham
Tollerton
—


Orkneys
—
See below.


Penzance
Culdrose
St. Just aerodrome is now in use by regular services and will continue to be so used until a transfer to Culdrose is possible.


Perth/Dundee
Errol
—


Plymouth
Harrowbeer
The permanent use of the aerodrome is subject to Parliamentary approval in view of Commoner'" rights.


Portsmouth
Portsmouth
—


Prestwick
Prestwick
Already in use lor regular services.


Scilly Isles
St. Mary's
Already in use for regular services.


Sheffield and Doncaster
Doncaster
—


Shetlands
Sumburgh
Already in use for regular services.


Southampton
Eastleigh
Already in use for regular services.


Stornoway
Stornoway
Already in use for regular services.


Swansea
Fairwood Common
—


Tiree
Tiree
Already in use for regular services.


Weston-super-Mare
Weston
Already in use for regular services.


Wick
Wick
Already in use for regular services.


York
York
—

The provision of air services to additional places, as, for example, the Highlands and Islands of Scotland, including the Orkneys inter-island services, is contemplated, but detailed surveys of the sites provisionally selected are necessary before their suitability can be determined.

Some of the landing grounds used before the war are much too small for medium-type aircraft, which will provide a faster and more efficient service, and the best means of serving these places requires further examination.

The introduction of air services direct from certain aerodromes in England, Scotland, Wales and Northern Ireland to the Continent is intended as aircraft become available and the aerodromes can be suitably improved and equipped. Additional sites will be announced from time to time as their acquisition becomes necessary for further expansion of air services.

North-West England

Mr. Vane: asked the Parliamentary Secretary to the Ministry of Civil Aviation when he expects that a regular air service between London and Carlisle, or some other centre in North-West England, will be established.

Mr. Lindgren: A review is now being made by the British European Airways Corporation for air services to be put into operation after the financial year 1947–48, and until this is complete it is not possible to make a statement.

Mr. Vane: Is the Parliamentary Secretary aware that while there is an elaborate service running between London and Scotland there is no service between London and the North-West of England? Could he arrange for one of the Scottish aircraft to stop at Carlisle or some other convenient place between now and the time when he may be able to effect an improvement?

Mr. Lindgren: That will be considered.

Mr. Grierson: Is it the intention of the Government to use the airport at Crosby for future air services, and what do they intend to do with the aerodrome at Great Orton, and Kingstown Aerodrome, which belongs to the Carlisle Corporation?

Mr. Lindgren: I will answer that question when we come to Question No. 24.

Mr. Douglas Marshall: Is the Parliamentary Secretary now aware that there is still no service to the West of England and Cornwall?

Mr. Mikardo: Is my hon. Friend aware that an advertisement of B.E.A.C., published in the last few days, contained a map purporting to show present services, and that these included a stop at Carlisle?

Mr. Lindgren: That is intelligent anticipation.

HUNGARY (POLITICAL SITUATION)

Mr. Ronald Chamberlain: asked the Secretary of State for Foreign Affairs whether he has received any further communication regarding recent events in Hungary, either from the Government of the U.S.S.R. or from the Hungarian Government.

The Secretary of State for Foreign Affairs (Mr. Ernest Bevin): No, Sir. I have nothing to add to the reply which I gave on 25th June to the Question by my hon. Friend the Member for King's Norton (Mr. Blackburn).

Mr. Chamberlain: Since the publication of the Hungarian White Paper, which I have now had an opportunity of reading, contains various allegations in regard to British organisations and persons, will the Foreign Secretary consider submitting the whole matter to an international body, or at least issuing some detailed statement in regard to these imputations?

Mr. Bevin: I do not think that that is advisable.

ITALY (PASSPORT VISAS)

Sir J. Mellor: asked the Secretary of State for Foreign Affairs whether he is aware that, at the Italian Consulate-General in London, British applicants are required to complete an elaborate form in quintuplicate, supply four photographs and pay £15s. for each visa for a short visit to Italy; that usually they have to queue standing for two hours; and if he will make an immediate protest.

Mr. Bevin: As stated in reply to a Question by the hon. Member for Aberdeen and Kincardine (Mr. Spence) on 27th February last, His Majesty's Government do not feel able to make official representations to the Italian Government regarding the elaborate formalities for obtaining Italian visas. Representations have recently been made, but without success, to the Italian Government about the fee of 25s. payable for Italian visas, and in accordance with the usual practice in such circumstances the fee payable by Italian nationals for British visas has been correspondingly raised to 25s.

Sir J. Mellor: Will the right hon. Gentleman answer the third part of my Question?

Mr. Bevin: I cannot overcome queueing where visas are concerned. My policy is to abolish these visas altogether. When the Treaty is ratified and one can deal with it, I shall certainly be very pleased to abolish visas in the case of Italy.

Sir J. Mellor: Would the right hon. Gentleman request the Italian Government at least to provide accommodation, so that these people can sit down instead of having to stand up for two hours?

Mr. Bevin: I do not think that anything I can do with regard to these visas would do away with the waiting and formalities which have to be overcome. The only way to get over the problem is to abolish them. In this country, I have abolished visas for a number of countries. The system I introduced of getting passports at the Ministry of Labour offices has reduced all the trouble so far as Great Britain is concerned.

Oral Answers to Questions — PALESTINE

English Books (Translations)

Lieut.-Colonel Lipton: asked the Secretary of State for the Colonies how many Arabic and Hebrew translations of books by English authors have been published in Palestine during the past five years; what assistance was given by the Palestine Government or the British Council; and what further steps are contemplated to spread a knowlege of English literature in Palestine.

The Secretary of State for the Colonies (Mr. Creech Jones): Five Arabic and ninety. Hebrew translations of books by English authors were published in Palestine during the past five years. Financial assistance by the Government and the British Council has been confined to books of specific educational value. Instruction in English is included in the curricula of the Arab and Jewish schools and in general both Arabs and Jews who receive a higher education read English books in the originals. There is no shortage of English books in the shops and libraries. The British Council is active in promoting increased study of English through its Institutes and libraries and lessons in the English langage are broadcast by the Palestine Broadcasting Service.

Mr. Pickthorn: I did not quite hear the right hon. Gentleman. Was I right in thinking that the figures were five and

90 and, if so, can he explain this apparent discrepancy, and will he place in the library a list of English books of educational value which have been translated?

Mr. Creech Jones: I am unable to explain these circumstances, except to say that these books are published by private publishers, but if it is possible to obtain the list required, I will do so and put it in the Library.

Major Farran (Arrest)

Lieut.-Colonel Lipton: asked the Secretary of State for the Colonies why Major R. A. Farran, of the Palestine police, was recently arrested.

Mr. Creech Jones: The circumstances of Major Farran's arrest were given in my reply to my hon. Friend the Member for Maldon (Mr. Driberg) on 2nd July, to which I have nothing to add.

Lieut.-Colonel Lipton: Could my right hon. Friend ask the authorities concerned to make up their minds as quickly as possible about the charge on which this officer is to be tried, and that the trial, when it does take place, should be held in public?

Mr. Creech Jones: These factors are being inquired into by the Palestinian authorities.

Underground Water Supplies

Mr. Janner: asked the Secretary of State for the Colonies what opposition to the draft Palestine Water Ordinance was expressed when it was first published in 1942; what steps have been taken to meet such objections in the law in this regard promulgated recently; and what was the urgency that required the promulgation of that law at the present time when the problem of Palestine and the future of that country is under inquiry by U.N.O.

Mr. Creech Jones: the Irrigation (Underground Water) Bill which was published in Palestine on 19th June, is based upon similar legislation in other countries. In drafting it consideration has been given to the objections raised by the Jewish Agency and the General Agricultural Council of Palestine to a Bill prepared in 1942. But the objection to the principle of public control of underground water resources cannot be accepted. The absence of such control was in fact criticised by the Anglo-


American Committee of Inquiry. The urgent need of powers to control distribution and exploitation of underground water supplies, and to collect information on which to base planned development of water resources as a whole, has been again emphasised by the recent abnormal drought and by the inauguration of certain schemes for the supply of water to new areas. Public control of water is essential and the administration cannot wait longer before tackling this urgent problem.

Mr. Janner: Is my right hon. Friend aware that this matter has been on the tapis for a long number of years and that this is an inopportune moment when the United Nations Committee of Inquiry is sitting to crystallise this point? Is he further aware that this is one of two suggestions contained in the Anglo-American Committee's Report which are being put into effect, although my right hon. Friend said that none would be put into effect without the others?

Mr. Creech Jones: The action does not, of course, depend on the Report of the Anglo-American Commission, but I think it will be appreciated that with the increasing population in Palestine and also the effects of the recent drought, some action has become imperative, and it is therefore inevitable that the Government should act now in regard to bringing the water resources of Palestine under some degree of public control.

Mr. T. Reid: Can my right hon. Friend say why this matter has been delayed so long seeing that many years ago the Palestine Government got an expert irrigation engineer from India to submit a system for the control of the water supply of the whole of Palestine?

Mr. Creech Jones: I can only imagine it was because a Labour Government was not in office.

Mr. Stanley: Has the Labour Government only come into Office this week? And what happened during the two years it has already been here?

Mr. Janner: Will my right hon. Friend allay the fears that are held in consequence of the fact that this Bill has suddenly been published, the fears of the Jewish population that their plans and arrangements for water supply will be interfered with?

Mr. Creech Jones: This has not been suddenly brought into force. Discussion in regard to these projects were going on for quite a long time, but the situation is so rapidly deteriorating that action must be taken.

Mr. Sydney Silverman: In view of my right hon. Friend's last answer but one, can he tell us on what date the Labour Government decided to change the policy of previous Governments, and whether this applies to anything else in Palestine besides underground water?

Lieut.-Commander Gurney Braithwaite: Will the Minister assure the House that all proper steps in this matter will now be finalised?

JEWISH IMMIGRANTS, CYPRUS (CAMPS)

Mr. Thomas Reid: asked the Secretary of State for the Colonies how it is proposed in future to meet the cost of camps in Cyprus for illegal Jewish immigrants, which already exceeds £1,000,000.

Mr. Creech Jones: I would refer my hon. Friend to the reply given by my right hon. Friend the Chancellor of the Exchequer on 17th June to the hon. Member for Bermondsey, West (Mr. Sargood), to which I have nothing to add.

BRITISH GUIANA (DEVELOPMENT)

Mr. T. Reid: asked the Secretary of State for the Colonies if there is any likelihood of initiating a scheme of State development of part of the hinterland of British Guiana on the lines of the East African groundnut undertaking.

Mr. Creech Jones: The question of the development of the interior of British Guiana will receive careful consideration by the Commission of Inquiry which is shortly to visit the Colony. On the information at present available, it does not seem probable that anything on the lines of the East African groundnut undertaking would be practicable, but I shall await the report of the Commission.

Mr. Walter Fletcher: Will the right hon. Gentleman bear in mind that all previous attempts to settle the Rupununi hinterland, even with Syrians some 30 years ago, have always failed because of very bad health conditions and bad transport?

Mr. Creech Jones: We are very well aware of that, but we must await the report of the Commission.

HONG KONG (CHINESE NATIONALS)

Mr. Rees-Williams: asked the Secretary of State for the Colonies whether he will offer sanctuary in Hong Kong to those Chinese professors, lecturers and students from the National Wuhan University, Wuchang, recently raided by Kuomintang police, who desire to enter the University of Hong Kong.

Mr. Creech Jones: There is no restriction upon the entry of Chinese nationals into Hong Kong. So far as the Hong Kong Government is concerned, therefore, the persons to whom my hon. Friend refer: are at liberty to proceed to the Colony at any time they please.

Mr. Rees-Williams: In view of the very serious effect this particular incident had upon the students and professors of the University, would the right hon. Gentleman offer sanctuary in the University itself to those students who desire to pursue their studies further?

Mr. Creech Jones: As the hon. Member is aware the question of the University in Hong Kong is now under consideration, but it is quite possible for students to proceed to Hong Kong.

Oral Answers to Questions — MALAYA AND SINGAPORE

Banned Broadcast (Mr. Anthony Brooke)

Mr. Gammans: asked the Secretary of State for the Colonies why the Department of Broadcasting of the Malayan Union and Singapore refused to allow Mr. Anthony Brooke to broadcast on the situation in Sarawak without first examining the script.

Mr. Creech Jones: The Director of Broadcasting is under no obligation to afford facilities to anyone who wishes to broadcast. But the reason, as given to Mr. Anthony Brooke by the Director, was that the Government were not prepared to allow their broadcasting system to be used for a broadcast which was likely to be definitely critical of Government policy in neighbouring territories, and which was also designed to promote a change in the Government of Sarawak and to undermine His Majesty's rule there.

Mr. Gammans: How do the Government know that this was likely to be critical if they did not take the trouble to see what the broadcast was?

Mr. Creech Jones: First of all, in his application to the Director, Mr. Anthony Brooke stated that he wished to broadcast all the facts relating to the cession of Sarawak, and the position that had arisen as a result thereof. Mr. Brooke has not subsequently challenged the basis of the decision taken by the Director.

Official Emoluments

Mr. Gammans: asked the Secretary of State for the Colonies what is the total expenditure on the personal emoluments and other annual recurrent charges of the Governor-General of Malaya, the Governor of the Malayan Union and the Governor of Singapore; and what were the corresponding figures for 1938 for the Governor of the Straits Settlements and High Commissioner, Malay States.

Mr. Creech Jones: The amounts provided in the 1947 Estimates for the personal emoluments of the Governor-General, Malaya, the Governor of the Malayan Union and the Governor of Singapore are £9,500, £7,500 and £6,500, respectively. For other annual charges exclusive of office expenses, the amounts provided are £8,633, £3,684, and £2,018, respectively. In 1938 the personal emoluments of the Governor of the Straits Settlements and the High Commissioner for the Malay States amounted to £8,000 and £2,969 was provided for other annually recurrent charges.

Mr. Gammans: In view of the increase of this expenditure, does the right hon. Gentleman propose to review the whole of this arrangement, the cost of which is falling today on the Malayan people?

Mr. Creech Jones: Obviously, when the Constitution of Malaya has been concluded and certain other developments have taken place in that part of the world, the whole of the set-up of this problem can come up for further consideration.

Internment Pay (Widow's Claim)

Vice-Admiral Taylor: asked the Secretary of State for the Colonies if he is aware that Mrs. Meredith, the widow of the late Registrar of Vehicles under the Singapore Municipality who was interned by the Japanese, has been unable to obtain any satisfaction for her claim for


the balance of her husband's salary during internment; and, in view of the fact that in official correspondence the Colonial Office has promised full pay during internment to municipal employees, when this claim will be settled.

Mr. Creech Jones: This is a matter for the Singapore Municipal Commissioners. The President states that Mrs. Meredith has been paid the total of her husband's Provident Fund Account to 31st January, 1942, and she has also received an advance of £1,870 on account of internment pay, leaving a balance of approximately £2,200. The resealed Grant of Probate was received by the Commissioners on 17th May, 1947; they are now prepared to make a further payment of £2,200, on request, pending the finalising of the account, and I understand that Mrs. Meredith is being so informed.

Vice-Admiral Taylor: Is the Minister aware that application for the payment was made to the municipal authorities two months and more ago, and that no reply has been received? Does the Minister repudiate the last paragraph of my question that the Colonial Office guaranteed payment to the municipal employees during their internment by the Japanese?

Mr. Creech Jones: This is really a matter for the municipal authorities. I think in regard to this particular case a settlement will now be finalised with the payment of the £2,200.

Natural Rubber (U.S.A. Restrictions)

Mr. Janner: asked the Secretary of State for the Colonies whether he will make a statement indicating the extent to which unemployment and hardship are being caused in Malaya through the embargo which the U.S. have placed on the import of rubber; and what steps are being taken by him to deal with this situation.

Mr. Creech Jones: Regarding the alleged embargo, I would refer my hon. Friend to the reply given to him by my hon. Friend the Under-Secretary of State for Foreign Affairs on 7th July. Generally speaking, the standard of living of the small holders and employees on rubber estates has fallen below the prewar level; this is due principally to the high cost of imported foods and other supplies, and has not, till now, been seriously accentuated by the recent drop in the

price of rubber. Nor has there yet been any large increase in unemployment. The matter is one which is receiving careful attention, and I would refer my hon. Friend to the reply given by my right hon. and learned Friend the President of the Board of Trade to my hon. Friend the Member for Swindon (Mr. T, Reid) on 3rd July.

Mr. Janner: Is my right hon. Friend aware that there is considerable fear that there is in fact an embargo which is having this serious effect and that the people think that an embargo is in force, though whether in specific terms or in consequence of the effect of some other regulation they do not know?

Mr. Creech Jones: There is really no embargo but there is the fact that rubber goods manufactured in the United States-must contain a percentage of synthetic rubber.

Mr. W. Fletcher: Is the right hon. Gentleman aware that the Crawford Act insists on 50 per cent. being incorporated in manufactured goods and is, in fact, an embargo? Is he further aware that the resulting fall in the price of rubber loses 100 million dollars a year to this country, and is having the effect implied in this Question of unemployment and distress, which will eventually lead to political unrest in Malaya?

Mr. Creech Jones: His Majesty's Government are fully aware of the problem in regard to rubber and they are giving it immediate and effective attention.

Mr. James Callaghan: Have the Government made it clear to the United States that the whole system of unilateral trading, by which they set such store, will break down unless they buy sterling commodities of this description, which is the only way we can pay our debts to the United States.

Mr. Creech Jones: We are fully alive to the problem, but the question obviously should be addressed to the Board of Trade.

Mr. Stanley: Surely, this is a matter of tremendous importance. I should like to know what steps the right hon. Gentleman has taken to bring home to the United States the disastrous effect of the policy they are pursuing?

Mr. Creech Jones: I can only answer that appropriate steps have been taken


by the Government in this matter as a result of the representations of my office.

Mr. Stanley: The right hon. Gentleman has told us that appropriate steps have been taken. Will he tell us what the appropriate steps were?

Mr. Creech Jones: I have said that the Colonial Office in consultation with other Departments concerned are fully alive to the importance of this matter, and particularly its importance to Malaya—

Mr. Callaghan: And us.

Mr. Creech Jones: —and consequently have taken appropriate steps—[HON. MEMBERS: "What steps?"]. I will repeat that—the Government have taken appropriate steps both in regard to international conferences meeting just now and in regard to the Government of the United States.

Mr. Gallacher: Has the Minister seen a statement of the chairman of the Rubber Company that America has forced down the price of rubber to one-third of its prewar value, and can he do anything in regard to that?

Mr. T. Reid: Is my right hon. Friend aware that the rubber planters in Ceylon are contemplating cutting out all rubber and turning over their estates to something else, because of the fall of the price of rubber below the cost of production caused by the action of the United States?

Constitutional Negotiations

Mr. Rees-Williams: asked the Secretary of State for the Colonies whether he will make a statement on the latest developments in the constitutional negotiations in British Malaya; and, in particular, whether Singapore is to be a member, on the same terms as Penang, of the Malayan Federation.

Mr. Creech Jones: I hope to make a statement before the end of the Session. With regard to Singapore, I am unable to add to my reply to the hon. Member for Bury (Mr. W. Fletcher) on 18th June.

Mr. Rees-Williams: In view of the anxiety that is being felt in Malaya that a settlement should be arrived at, could my right hon. Friend make a statement as soon as possible?

Mr. Creech Jones: The statement will be made very soon indeed, but the delay is not unduly long because obviously a number of problems have to be resolved before a statement can be made.

Mr. W. Fletcher: Is the delay due to the fact that there are so many different Governments and so much over administration in Malaya?

Mr. Creech Jones: No, that is a completely false statement of the situation.

Mr. Fletcher: It was a question.

Oral Answers to Questions — JAMAICA

British Caribbean Airways

Mr. Gammans: asked the Secretary of State for the Colonies why the British Caribbean Airways, Limited, a British company registered in Jamaica, has been refused Jamaican designation as a scheduled carrier between Jamaica and the U.S.A.

Mr. Creech Jones: I am still in correspondence with the Governor of Jamaica on this matter and am not aware that any final decision on the application of British Caribbean Airways has yet been taken.

Mr. Gammans: Is the Secretary of State aware that while he has been in correspondence with the Governor other nations are, in fact, lifting the trade?

Mr. Creech Jones: That hardly arises on this matter.

Public Meetings (Proclamation)

Mr. Skinnard: asked the Secretary f State for the Colonies whether the Proclamation recently issued by the Governor f Jamaica prohibiting public demonstrations has now been withdrawn.

Mr. Creech Jones: In accordance with the terms of the Jamaica Public Meetings Law of 1939, the Proclamation ceased to have effect after one month. No new Proclamation has since been issued.

Commodity Prices (Subsidies)

Mr. Skinnard: asked the Secretary of state for the Colonies what action is being taken by the Government of Jamaica to subsidise the prices of essential commodities; what is the level of the cost-of-living index as compared with the level in 1945; and what changes have taken place in wage levels in the same period.

Mr. Creech Jones: The Government of Jamaica has provided £100,000 in the current year's estimates for subsidising imported foodstuffs and £14,300 for purchasing local foodstuffs at guaranteed minimum prices. The cost of living stands at present at 190 as compared with 160 in June, 1945. Wage levels have increased by an average of about 20 per cent. in the same period. In the case of the workers employed by the sugar industry, however, the increase in rates has been over 25 per cent.

REGIONAL HOSPITAL BOARDS (APPOINTMENTS)

Colonel Stoddart-Scott: asked the Prime Minister, if, in view of the fact that in the appointment of regional hospital boards, hon. Members of this House from one party only have been appointed, although hon. Members from other parties have similar qualifications of hospital work administration and management, he will set up a Select Committee to consider the effect of such political appointments on the hospital services of this country.

The Prime Minister (Mr. Attlee): I repudiate the suggestion that these appointments are political; examination of the boards' membership will prove that persons with suitable experience have been chosen without any shadow of political exclusiveness. The last part of the Question, therefore, does not arise.

Colonel Stoddart-Scott: Is the Prime Minister aware that six members of this House, all Member of the right hon. Gentleman's Party, and four Members of another place, none of whom is Conservative, have been chosen to sit upon these boards; and is he further aware that such political appointments will mean an inevitable change in these hospital boards after the next General Election and will be to the detriment of the hospital service?

The Prime Minister: I do not think that the hon. and gallant Gentleman has his facts correct. I believe there are five Members from this side of the House on these boards and from another place there is Lord Cunliffe, the Earl of Cran-brook, and Lord Henley, who are certainly not members of this party, and Lord Eustace Percy, a very eminent Conservative. I really do think that it is unjustifiable to complain just because

now, after many years, some Labour people are appointed to these various boards.

Sir Henry Morris-Jones: Is the Prime Minister aware that some of the names on these boards, particularly in North Wales, have been received with perplexity, and may I ask whether the right hon. Gentleman can tell the House why people who have given their lives to hospital service and whose names are well known are omitted?

The Prime Minister: I cannot tell the hon. Gentleman that. Perhaps they are too old.

PROFESSIONAL AND TECHNICAL TRAINING (CO-ORDINATION)

Mr. Kenneth Lindsay: asked the Prime Minister whether he is satisfied with the present arrangements within the Ministry of Labour, the University Grants Committee, the Ministry of Education and other departments for ensuring an adequate supply of trained men and women for the professions and for higher posts in the field of technology; and whether, in any future White Paper on economic conditions, he will include a statement on this matter for the guidance of industry, the professions, university appointment boards and students entering on their careers.

The Prime Minister: I am satisfied that as rapid progress is being made with the expansion of facilities at schools, colleges and universities as is practicable under present conditions and that present arrangements for co-ordinating the work of the various departments concerned in this work are satisfactory. In order to estimate the needs of the various professions and industries, enquiries are being made by my right hon. Friend the Minister of Labour and National Service, and the resulting information will be communicated to the universities and the Government Departments concerned. Careers pamphlets are available to the public. I am not prepared to say at present whether material on this subject could appropriately be included in a White Paper.

Mr. Lindsay: Is the right hon. Gentleman aware that, apart from letters which have appeared in "The Times" and the "Manchester Guardian" this week on the


subject, there is an immediate situation since the colleges of London are placarded with details of posts in science, teaching and industry, but these men are to be called up on 1st September? This is the urgency of the question, and could the Prime Minister look into it again?

The Prime Minister: Perhaps the hon. Gentleman will let me know the exact point he wishes to raise and I will look into it. It does not arise on this Question.

Oral Answers to Questions — ARMED FORCES

Medical Services (Merging)

Commander Noble: asked the Minister of Defence what progress has been made towards merging the three Service medical branches.

The Minister of Defence (Mr. A. V. Alexander): This question is still under examination. I ought, however, to make it clear that it has not yet been established that the complete merger of the three medical services is to be preferred to the alternative of the maximum degree of co-ordination between those services.

Mr. W. Fletcher: Does the right hon. Gentleman realise that the enormous overlapping has resulted in great lack of accommodation and personnel overseas?

Colonel Stoddart-Scott: Does the Minister realise that the merger of these services will result in great economy in military manpower, and when he is considering it will he consider at the same time the merger of the three nursing services?

Mr. Alexander: I have been looking into the question of economy of manpower that might be effected by the merger. Not only I, but other Departments which have examined the matter so far have not been convinced of the actual economy to be effected. As I say, however, the matter is still under consideration.

Call-up (Choice of Service)

Lieut.-Colonel Bromley-Davenport: asked the Minister of Defence what opportunities are given to conscripts to choose in which arm they wish to do their national service.

Mr. Alexander: Every man is invited, when registering for national service, to say whether he would prefer to serve in

the Royal Navy, Royal Marines, Army, or Royal Air Force, and so far as possible he is subsequently called up to the Service of his choice. After call-up a man is allowed to express a preference for a particular arm or branch of the Service to which he has been allocated. If he is found to be suitable, and there are vacancies, he would normally be allowed to enter it.

Sir Ralph Glyn: Can steps be taken so that young men who are in the Cadet Forces can be allocated to the branch of the Services to which they belong?

Mr. Alexander: I cannot at this stage add to what I said to the House the other day. I have taken careful note of the expression of the views of the House and, particularly, of the point made by the right hon. Gentleman the Deputy Leader of the Opposition, and we are bringing these views to the notice of all those who are concerned with people coming from the cadets. We do our best to meet the wishes of the House, but I do not wish to give a promise which would lead every cadet to feel that he had the definite undertaking of the Government, since the ultimate requirements of the Services have to be considered.

Sir R. Glyn: Is the Minister aware that owing to this uncertainty, the Air Cadets are falling off very much in numbers?

Mr. Sorensen: Can the Minister say whether we may now take it that the term "conscript" is the legitimate one to use for those called up for national service?

Mr. Alexander: I do not think that arises on this Question.

Mr. Beechman: Will the Minister make provision so that those associated with the sea are given a chance of doing their service with the Royal Navy as they desire to do, and as the Minister of Labour undertook that they would be able to do in a reply to a Question of mine some time ago—an undertaking which it has been impossible to put into effect?

Mr. Alexander: We will do our best within the scope of the answers I have already given on the subject. I think it is an excellent thing to have those from a seafaring industry brought into the sea services.

Oral Answers to Questions — FOOD SUPPLIES

Grocery Licence, Louth

Mr. Osborne: asked the Minister of Food why a greengrocery licence has been refused to Mr. Lloyd Abbott, 23, Newbridge Hill, Louth, who gave up his greengrocery business at Tetney on volunteering for service in 1939, and after serving four years abroad in the Royal Tank Regiment, purchased other premises that were previously used as grocers and general dealers.

The Parliamentary Secretary to the Ministry of Food (Dr. Edith Summerskill): Mr. Lloyd Ablott has not applied for a licence to sell greengroceries. His application for a licence to sell groceries and for a catering licence was refused by the local Food Control Committee because they do not consider them necessary to meet consumer need, and because Mr. Ablott is not in the priority class. It is open to him to appeal to the divisional food officer against this decision if he wishes to do so.

Mr. Osborne: Is the hon. Lady aware that this man is now drawing unemployment pay for the first time in his life because of the decision of her Department, and does she think that that is a fair reward for a man who has served for six years?

Dr. Summerskill: I find that difficult to understand because on 25th November, 1946, we granted this man a licence to sell chocolate and sugar confectionery.

Mr. Osborne: But is it not a fact that the number of coupons the hon. Lady's Department gave the man was 1,800, which would produce him a profit of exactly 29s. a week, on which he is expected to keep a wife and child?

Royal Agricultural Show, Lincoln (Allocations)

Mr. Osborne: asked the Minister of Food if he is aware of the complaints made by the Mayor of Lincoln about the inadequacy of food supplies for the Royal Agricultural Show; and whether it was a local or a London office decision not to accede to the requests of the mayor for better supplies, prior to the opening of the show.

Dr. Summerskill: My right hon. Friend has been advised that in spite of the very large attendance food was available for all those at the show. As my right hon. Friend informed the hon. Member on 18th June, he was satisfied with the arrange-

ments made beforehand for supplying food at the show itself and in the shops and that catering establishments were also provided for.

Italian Tomatoes (Prices)

Mr. Chamberlain: asked the Minister of Food whether he is aware that Italian tomatoes are being imported into this country at 2d. per pound and retailed at the maximum price of 1s. 4d. per pound; and what steps he is taking to prevent this profiteering.

Dr. Summerskill: Tomatoes imported into this country from Italy, are brought in on private account and I have no precise information about the price paid by the importer. I understand, however, that the price is about 3d. per lb. packed, f.o.r. The first-hand selling price at Covent Garden is 8d. per lb. for sound fruit, out of which about 2—d. per lb. has to be paid for the cost of transport from Italy. There is also an import duty of 2d. per lb., leaving a balance of 3½d. per lb. to cover the cost of the fruit and all other incidental expenses such as packing, packing materials, selling agency charges and the cost of the container. Whilst the maximum retail selling price is at present 1s. 4d. per lb., I am informed that some retailers are selling at is. per lb. and others at as low as 9d. per lb. The margin has, of course, to cover any wastage of over-ripe fruit, which is high in some cases.

Mr. Chamberlain: May I ask the hon. Lady whether she is aware that the tomatoes were being brought here at the end of last week at between 2d. to 4d. a lb.? Whatever one may think of maximum prices when there is scarcity, it is not generally agreed that when there is a glut or a comparative glut is the time to take maximum prices off, because they at once become minimum prices?

Dr. Summerskill: I agree with my hon. Friend. I have explained to the House that that has been our policy in the past. These prices will be reduced on 14th July, but we must bear in mind that "maximum prices" does not mean "minimum prices."

Mr. Chamberlain: Do I understand the hon. Lady to say that maximum prices are to be reduced?

Dr. Summerskill: The maximum prices will be reduced on 14th July.

Mr. McGhee: Will the Minister explain why there is an import duty on these tomatoes?

Dr. Summerskill: That is customary.

Mr. Walkden: May I ask the hon. Lady whether she can review the whole of this question of tomatoes? There are far too many speculators in a business where there are many reputable people. A review would be good for the trade and would sort it out.

Dr. Summerskill: If the hon. Gentleman will give me the names I will look into the matter.

Mr. Walkden: I have already submitted some.

COLONIES (CIVIL AVIATION ROUTES)

Wing-Commander Roland Robinson: asked the Secretary of State for the Colonies what replies have been received from Colonial Governments to his inquiry whether they would wish, under the terms of Article 5 of the Convention on International Civil Aviation concluded at Chicago in 1944, to prescribe routes to be followed by civil aircraft over their territories; and what action he proposes to take in this matter.

Mr. Creech Jones: I regret that my reply to the hon. Member on 7th May was likely to be misleading. So far, I have consulted Colonial Governments only in regard to the routes to be followed by scheduled international air services and not in regard to the action to be taken under Article 5 of the Chicago Convention. I am advised that it is desirable that where routes are prescribed they should fit into the air traffic control pattern to be established in the areas concerned. I am in communication with my noble Friend the Minister of Civil Aviation, with regard to the air traffic control pattern to be established in the Colonial areas concerned, and I propose to defer further communication with Colonial Governments on the subject until decisions are reached on the question of air traffic control.

Oral Answers to Questions — AFRICAN COLONIES

Ex-Service Men (Employment)

Mr. Sorensen: asked the Secretary of State for the Colonies to what extent

have West and East African ex-Service men been placed in jobs where they can usefully employ the training and experience they gained during their military service; and whether agencies or departments exist in all African Colonies whose function it is to make the best possible use of the qualifications of these ex-Service men.

Mr. Creech Jones: Resettlement machinery, usually working through the established employment exchanges or bureaux, has been set up in all African Colonies, and every effort is made to place ex-Service men seeking employment in jobs where they will make the best use of any special qualifications which they acquired during their military service. There are also supplementary postwar training schemes in operation. As regards the numbers placed in employment, I am obtaining the latest information from the Governments concerned which I will send to my hon. Friend as soon as possible.

Mr. Sorensen: Could my right hon. Friend say in general terms the proportion of ex-Service men? Is it very large, such as 50 per cent.?

Mr. Creech Jones: It 1s impossible to give the figure. In any case, the proportion varies from territory to territory.

Flood Damage Relief Fund

Mr. Sorensen: asked the Secretary of State for the Colonies, in view of the undesirability of this country receiving financial assistance from Colonies whose peoples are far poorer than the people of this country and whose social services cannot expand as they should because of financal stringency, why the Nigerian and Gold Coast Governments were not informed that, while the motive of their gift of £25,000 to aid British flood victims was greatly appreciated, it is preferable that this sum should be used to meet West African needs, including damage from flood in West Africa.

Mr. Creech Jones: In each case the resolution proposing the gift was moved and seconded by African unofficial members of Legislative Councils. It would have been ungracious to have rejected this generous token of sympathy and contrary to the spirit of the relations existing between this country and the Colonies.

Mr. Sorensen: Is it not the case that we are making grants to these Colonies,


who are intrinsically very poor and cannot afford gifts of this kind? Could not my right hon. Friend, while appreciating the motives, have acted more wisely in the matter?

Mr. Creech Jones: These grants were made to the Lord Mayor's Fund. It would have been most ungracious not to accept them.

ROYAL NAVY (MANPOWER COMMITTEE)

Commander Noble: asked the Parliamentary Secretary to the Admiralty what are the terms of reference of the Manpower Economy Committee under the chairmanship of His Honour Tom Eastham, K.C.; and whether its report will be published.

The Parliamentary and Financial Secretary to the Admiralty (Mr. John Dugdale): The terms of reference of this Committee are:
To review the methods of manning and use of manpower in the Royal Navy and the Royal Marines during peace and to recommend measures for securing that fighting efficiency is maintained with the greatest possible economy in manpower.
I should add that the Committee's inquiries will be directed mainly to broad issues rather than to the detailed examination of complements. The committee's report will, in accordance with normal practice, be a confidential document submitted to my noble Friend for his consideration.

Mr. Willis: May I ask my hon. Friend why, in view of the importance of the engineering and technical branches of the Navy, those branches are not represented?

Mr. Dugdale: We cannot have representatives from every branch. We have people with general qualifications who will be able to regard the Navy as a whole.

Mr. Willis: There is one representative for the executive branch and one for the supply branch, while all the other branches have no representation at all.

Mr. Dugdale: It is not a question of representation.

Commander Noble: As the inquiry is to be on rather broad lines, would it not be possible for the report to be made available?

Mr. Dugdale: That is never done in cases such as this. Naturally, I will ask my noble Friend whether it can be done. but I think it is not the usual practice.

Major Bruce: Can my hon. Friend give a reason why it is never done?

Mr. Dugdale: Because people are very much more willing to give evidence in cases where they know that the reports are not to be made public.

J.U.52 AIRCRAFT (CONVERSION)

Colonel J. R. H. Hutchison: asked the Minister of Supply what is the cost of converting a J.U.52 into a Jupiter passenger aircraft.

The Joint Parliamentary Secretary to the Ministry of Supply (Mr. Wood burn): The average is about £12,500.

Colonel Hutchison: Is the hon. Member aware that the conversion of the Dakota aircraft to 21 seaters compared with Jupiters to 12 to 14 seaters can be done at approximately the same price by private enterprise?

Mr. Woodburn: I am afraid that the point does not arise out of the Question. Other considerations come into the matter because of the uses of Dakotas which do not arise in the case of Jupiters.

Mr. Rankin: Does the figure of £12,500 include maintenance unit costs? If it does not, what would be the cost of conversion if those factors were included?

Mr. Woodburn: I do not quite follow that question. The £12,500 is the cost of the conversion of these planes and handing them over to the Ministry of Civil Aviation

UNIVERSITY STUDENTS (STATISTICS)

Mr. K. Lindsay: asked the Chancellor of the Exchequer, what is the proportion of ex-Service students to those coming direct from school in the universities, giving separate figures for each university and university college.

The Financial Secretary to the Treasury (Mr. Glenvil Hall): I am collecting this information and will circulate it in the OFFICIAL REPORT.

BUSINESS OF THE HOUSE

Ordered,
That the Finance Bill, as amended, may be considered immediately after the re-committal of the Bill and report thereof, notwithstanding the practice of the House as to the interval between the various stages of such a Bill."—[Mr. Herbert Morrison.]

Orders of the Day — FINANCE BILL

Order for consideration, as amended, read.

Bill re-committed to a Committee of the Whole House in respect of the Amendments to Clause 6, page 6, lines 33 and 45; of the first Amendment to Clause 8, page 7, line 14; of the Amendments to Clause 8, page 7, lines 15 and 18; of the new Clauses (Rate of excise duty on motor cars (other than electrically propelled)and (Imported films;)of the Amendment to Schedule 3, page 61, line 37 and of the second Amendment to Schedule 4, page 63, line 33, standing on the Notice Paper in the name of the Chancellor of the Exchequer.—(Mr. Dalton.)

Bill immediately considered in Committee.

[Major MILNER in the Chair]

CLAUSE 6.—(Intermediate rate of purchase tax on certain goods.)

3.31 p.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall): I beg to move, in page 6, line 33, after second "in," to insert "Part I of."
This is a drafting Amendment. Presently we shall ask for the insertion of a new Part to the Schedule, and this is a paving Amendment which will enable that to be done.

Mr. Oliver Stanley: On a point of Order, Major Milner. May I ask for your guidance on this? This Amendment is a lead-in to an extremely important Amendment which imposes double Purchase Tax on certain goods. We are opposed to that proposal. We desire not only to discuss it but to have an opportunity of voting on it. Can we be assured that the insertion of these words at this stage will not prejudice our

chance when it comes to a discussion on the main proposal and, it not, on which the lead-in Amendments is it proposed to take the main discussion?

The Chancellor of the Exchequer (Mr. Dalton): We, of course, apprehend that there will be a desire for discussion. We welcome a discussion on the proposal, and if the right hon. Gentleman wishes to divide, that would be a very natural reaction, unless he shall have been converted by what may be said in the Debate. I think discussion naturally arises on the first Amendment to Clause 8 which provides for a 66⅔ per cent. tax. We have no desire to evade Debate. I suggest we might have the main Debate at that point.

Mr. Stanley: This is a matter of procedure, but the difficulty is that that involves passing other Amendments beforehand. If an Amendment is passed then to delete the actual provision for doubling the Purchase Tax it would leave those words without meaning and it might, therefore, be held out of Order for that decision to be challenged.

The Chairman: I will give the right hon. Gentleman an assurance that such a proposal will not be ruled out of Order in such circumstances. We can come to a decision when the time arrives as to whether an alteration will be required thereafter.

Mr. Bowles (Nuneaton): Might I suggest that supposing the Governments subsequent Amendment were withdrawn, the Chancellor of the Exchequer or the Financial Secretary could give an undertaking that on the Report stage the words now inserted would be taken out?

The Chairman: I think the right hon. Gentleman will be content with the assurance I have given.

Amendment agreed to.

Mr. Glenvil Hall: I beg to move, in page 6, line 45, at end, to add:
and the provisions of Part II of the Fourth Schedule to this Act shall have effect as to the ascertainment of the retail value of road vehicles in connection with purchase tax.
This is consequential and again hinges on and ties up with an Amendment to the Fourth Schedule which will be moved by my right hon. Friend later on.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.

CLAUSE 8—(Commencement of two preceding sections, and saving.)

Mr. Dalton: I beg to move, in page 7, line 14, after "operation," to insert:
(a)except in so far as they relate to road vehicles.
This is the point at which we can most conveniently deal with this subject. The proposal which I have now to submit to the Committee is that which I indicated when I made my previous statement on the matter of motor taxation generally. Although we are properly treating the two things separately, this proposal for the double Purchase Tax on the more expensive cars is part of the single scheme. It was not proposed on its own isolated merit but as a balancing factor in the general scheme of motorcar taxation, connected with the reduction of tax to £10 for new cars. I am not dealing with that question at the moment but merely reminding the Committee that this is part of a balanced scheme.
As I indicated on a previous occasion, the reduction of the annual licence fee to £10 carries exceptional advantages for the more expensive cars. Therefore, it seemed to the Government that the equitable way to deal with this matter—and also from the Treasury point of view the way in which to balance our accounts substantially for the present year—was by compensating for the loss of revenue on the reduction of the annual licence fee on new cars. We do not propose, as some have suggested in the past, to do this by an increase on the fuel tax. The method we propose provides that all cars which ex-tax are worth £1,000 or more should be subject to Purchase Tax at 66f per cent. instead of 33⅓ per cent. This may quite properly be regarded as requiring the person who purchases one of these more expensive cars which are now becoming liable to the higher rate of duty to pay a larger lump sum down by way of Purchase Tax in return for the prospective reduction year by year in the future of his annual licence fee.
I was reading something in the "Sunday Times" of 29th June, by their motoring correspondent. That is not a paper which gives unquestioning support to His Majesty's Government on all subjects, and therefore I attach the

more importance to this expert- opinion. The motoring correspondent writes a note which is broadly favourable to the proposals I am making, and in it he deals with some of the objections which have been made. He says:
The effect, it is complained, will be to reduce to a dangerous degree the saleability of such cars on the home market.
That is the whole issue with regard to Purchase Tax. We are most anxious to sustain the export drive, particularly in regard to these cars, which would raise, by reason of their price, a large foreign exchange. [Interruption.]

Mr. Royle: On a point of Order, Major Milner. Is it out of Order for me to leave a case on the bench for the convenience of another hon. Member who wishes to make reference to certain notes for the Debate? I have brought his bag into the Chamber.

Hon. Members: Take it away.

Captain Crookshank: We do not know what is inside it.

Mr. Dalton: I gather, Major Milner, that it is not so eminently out of Order that you desire to intervene in the matter.

Mr. Stanley: As the matter has been called, to the attention of the Chair and no action has been taken, may I ask is it now to be held, Major Milner, that people may bring into the House despatch cases or even suitcases, and place them on the bench? It would be for our convenience to know that that is now the new Rule.

The Chairman: Frankly, I was not aware what the hon. Member for West Salford (Mr. Royle) had brought into the Chamber. It is perfectly in Order for Ministers to bring in despatch boxes, but it is quite out of Order to bring in receptacles of a different character.

Hon. Members: Take it away.

Mr. Royle: I beg your pardon, Major Milner, I will take it away. One gets into trouble for somebody else's fault.

Mr. James Hudson: On a point of Order, Major Milner, now that the case has been removed. Is there any difference in size or appearance between the article removed and the boxes usually brought into the Chamber by Ministers? Why should a special advantage be


afforded, even to Ministers, in matters of this kind?

The Chairman: Of course, it is an ancient practice, and one which is peculiar to Ministers, who have the privilege of bringing despatch boxes into the Chamber. It is quite out of Order to bring in receptacles of a different nature or kind, on which it would be difficult to draw a line.

Mr. Dalton: I call you to witness, Major Milner, that I have brought in no box— red, black or brown. I have merely a small sheaf of aides-memoire.
What I was seeking to argue, when we had this interlude, was that in the adjustment of this, the expert motoring correspondent of the "Sunday Times" thought that the danger to the home market of the more expensive cars had been somewhat exaggerated by those who have criticised this proposal. He concludes the discussion of the matter by saying:
There is evidence"—
I am only quoting one sentence, but the whole paragraph is interesting—
that buyers of luxury cars are not, in fact. cancelling their orders.
He goes on to say that the agents point out that the savings of more than £50 a year by the flat rate tax offsets the increase of even £1,000 of capital outlay, much of which is recouped when the car is sold secondhand. That is evidence that this is helping the industry. I merely quote this as a dispassionate person's view, who will not be suspected of being on my side.

Mr. Scollan: Is the Chancellor aware that some of these agents have now reduced the price by £1 to keep within the lower tax?

Mr. Dalton: Yes, that is quite true. Certain cars are now for sale at £999 ex-tax. That is all right by me. They fall outside the field of the double Purchase Tax. That is all right. Wherever you draw a line, there will be somebody rather near it who can move across it; we find that in all these tax arrangements. I am merely making the point made by the motoring correspondent, I have quoted, as evidence that the increased Purchase Tax which I am proposing must be set against

the annual reduction in the licence fee. In the case of the more expensive cars which, but for these tax proposals, would be paying a higher licence fee of £70, £80 or more a year, if this is worked out, it is bound to result, on the whole, in a balance of advantage to the purchaser of these cars in the home market. He pays so much less each year and, because of that, it is worth while from his point of view to pay a somewhat larger purchase price such as is here involved.
3.45 p.m.
That is the broad argument. It is open to debate where we draw the line, but I would not be prepared to recommend to the Committee the annual licence fee on new cars of £10,however high-powered unless we balanced it, in regard to the more expensive and luxurious cars, by an addition to the Purchase Tax. If we say there shall be an addition to the Purchase Tax, we are limited to considering what the addition shall be. We cannot just make the Purchase Tax any percentage we like; it has to be a certain percentage of 100 per cent—of 33⅓ per cent., which is now levied on all cars for the home market, or of 66⅔ per cent., a step which I have this year introduced into the Finance Bill, and the Committee have approved, and to which already some of the previous 100 per cent. liabilities have been reduced. Therefore, if we are to raise the Purchase Tax as it now stands from 33⅓ per cent., we can raise it only either to 66⅔ per cent. or to 100 per cent. I have not proposed to raise it to 100 per cent.; that, in my view, would be too much. Therefore, our idea is to raise it to 66⅔ per cent., if we are to raise it at all, and that is the proposal I am now defending.
I made this proposal to the House on 17th June, and it is proposed that the change should be made operative as from the day following that statement, in order to prevent forestalling, as from 18th June. The proposal is that the increased rate of tax would apply to all cars within the field here defined, when these are despatched by the manufacturer on or after 18th June. The increased tax will also apply to imported cars. There are not many of them but, in so far as they are coming in, they would also have to pay this tax in so far as tax is chargeable at import, as in most cases it is, provided they are entered with the Customs or


through some agent for delivery to a person in this country on or after 18th June.
If my principle of action is accepted, the Committee may debate where the line should be drawn. I have proposed to draw it at £1,000 ex-tax. The provision here of £1,280 cum-tax is the same thing and it is the more convenient, I am advised, so to define it. If it is taken at £1,000 ex-tax, one excludes all except a relatively small number of types of cars. I will not at this stage enumerate these, or discuss their special characteristics, or the market for them. I have, of course, had representations made from various hon. Members, and various private interests have quite properly made representations to me. I have considered them with great care, and it may well be that some of these points will be raised in Debate. It would be more convenient that I should not anticipate those, but should rather deal or ask my hon. Friend to deal, later on with any points that may be raised by hon. Members in the discussion.
Having looked at the thing to the best of my ability, it seems to me that the £1,000 ex-tax is the right dividing line. Everything is experimental in our finances, not least in the field of the Purchase Tax. It always has been so. I am inclined to think—though naturally, we will listen to the Debate as it proceeds —in spite of the representations I have received, that this is the right line at which to distinguish the more luxurious from the less luxurious cars. On those falling below this level, the present Purchase Tax is retained at 33⅓ for the home market and those cars all obtain the advantage of £10 a year annual licence fee. Those which come above this line of £1,000 or more, appear to me to get a pretty good bargain, balanced annually with this lump sum payment, under the proposal I make. Although I may say another word later after the Debate has developed, at this stage I merely move the Amendment.

The Chairman: I must make it clear that if we are to have a general Debate on these Amendments, the Debate ought not to be repeated on the Third Schedule. I am rather in the hands of the Committee, and if they wish to have a general Debate now I am perfectly agreeable on that undertaking.

Mr. Osbert Peake: That would be quite agreeable, provided that it is understood that we can discuss the Amendment in the name of my right hon. Friend the Member for West Bristol (Mr. Stanley) to leave out certain words from the Amendment in the name of the Chancellor to Schedule 3, page 61, line 37.

The Chairman: I am much obliged to the right hon. Gentleman.

Mr. Peake: I listened with interest to the explanation of this new proposal given by the Chancellor and I would like to deal straight away with the points he has made. He bases his case for the doubling of the Purchase Tax on cars of which the price is more than £1,000 almost entirely on the ground that it will provide what he calls a balancing factor to offset a relief which the purchaser of a high-powered car will obtain by a reduction of the horse-power tax to the fixed figure of £10. He goes on to say that anybody having a high-powered car, and paying this extra Purchase Tax, will get a good bargain, because the amount of money he would save over a period of years on the horse-power tax will equal and even, he claims, exceed the additional Purchase Tax paid. I shall be very interested to see how the Chancellor makes out his last proposition. Even if we assume the life of the car, being a good quality car, to be a long one, and put it at 10 years, I should think a simple mathematical calculation would show that a saving of £30 on a 30-horse-power car over 10 years amounting to £300 was nothing like equal to doubling the Purchase Tax on present prices of cars of that type. Many cars of that class cost £2,000, and a Purchase Tax of 66f would amount to £1,300 or £1,400, and the additional Purchase Tax imposed will be £600 or £700. I do not think we can justify this additional tax on the ground that it is to be a balancing factor.
A £1,000 car today is only the same vehicle as cost £400 before the war, and there are many cars of quite small horsepower. 10 or 12-horse-power cars, which are priced today at £1,000 or more. Those cars will be hit by this doubling of the Purchase Tax. On the other hand, there will be cars in the future—and this is the whole object surely of fixing the Horse-Power Tax at £10—of a high horse-power which are cheap vehicles to buy. The whole object of the new arrangement is


to enable cars of 20 or 25 horse-power to be built here, mass produced, suitable for sale overseas in the Dominions and Colonies. Therefore, there is no true relationship between horse-power on the one hand, and price on the other. It is intended that in the future there will be very much less relationship between those two factors than at present. A car of 25 or 30 horse-power will be selling very cheap, and some small high quality cars will be selling at £1,000 or more. If the Chancellor wanted to balance this factor of the advantage gained by a reduction in the horse-power tax by an increase in the Purchase Tax, I believe he should have related his rates of Purchase Tax to the horse-power of the car. The Purchase Tax in the home market should be fixed to a relationship with the horse-power of the car, and in that way the Chancellor would get back from the purchaser of a high-powered car an amount which would precisely balance the advantage he gained by the reduction of the Horse-Power Tax.

Mr. Benson: If that were adopted, it would defeat the whole purpose of the flat rate tax.

Mr. Peake: Surely, the Chancellor's proposal has exactly that effect, as I think I will be able to show the hon. Member for Chesterfield (Mr. Benson) in the course of a few moments.
The Chancellor goes on to say that if he is to go on to increase the Purchase Tax he has to fix the rate at one of the rates provided, and that he has only the 33⅓ compartment, the 66§, and the 100 per cent. compartment, and that he has no alternative but to step up the rate to 66|. That he should feel himself bound by the three or four compartments of Purchase Tax existing at present seems quite ridiculous, especially when we look at what he is going to do in regard to Customs Duties for imported films. He has made some revolutionary proposals in this Finance Bill, and if he wished to fix graded rates of Purchase Tax, there would be nothing whatever to stop him doing so. I am quite sure that on his first point, that this is a balancing charge to recoup an advantage the purchaser of a car might otherwise obtain, his case is not made out.

Mr. Dalton: I did not suggest that it would be balanced car by car, but, in the end, in terms of revenue.

Mr. Peake: In the aggregate revenue which the Chancellor expects to get, there is some relation. Actually the right hon. Gentleman is forfeiting £1 million of revenue by reducing the horse-power tax in the coming year, but he anticipates to get £1,500,000, or 50 per cent. more than he is giving away, by this additional Purchase Tax. So the balance, even on the global figures, is a very rough and ready one, and by no means to his disadvantage. This is the first case in which a single type of article has been subjected to differential rates of tax, and it seems to us on this side of the Committee to be quite unnecessary, because, so long as we tax by means of percentage, the more expensive article automatically pays a larger sum in duty than does the cheaper. In point of fact, under this proposal a £600 car will continue to pay £200 in duty, whereas the £1,200 car will pay, not double, but four times that amount of tax. We on this side of the Committee have, of course, a fundamentally different attitude towards the Purchase Tax to that which is held by the Chancellor. We think that it is a bad tax and that the Chancellor's declaration last year that it was to continue as a permanent part of the revenue was an inflationary pronouncement.

4.0 p.m.

Mr. Scollan: Bow could it be inflationary?

Mr. Peake: Because it induced everybody to go and purchase now; if the tax is never to be taken off, people say that they might as well buy now, instead of keeping their money in the bank. We also think that by setting a precedent of this character in increasing the Purchase Tax the Chancellor will make people much more inclined than they would have been to purchase articles which otherwise they would not buy at the present time.
In this case, this increased tax is being imposed at a particularly unfortunate time. Two years ago there might have been something to be said for this changeover before the motor manufacturers had laid down their postwar designs. Two years have elapsed, and the result is bound to be great dislocation in the shops and the factories of motor car manufacturers. The right hon. Gentleman read a quotation from the "Sunday Times" of a fortnight ago in which their motor correspondent said he had not heard of any


cancellation of orders. My information, which is a great deal more recent than that of the "Sunday Times" correspondent, is that the cancellation of orders is going on, and is widespread. In fact, this morning, in order to confirm what is happening, I rang up one of our leading firms of motorcar manufacturers, which makes not only small 10 h.p. cars but also high-power luxury vehicles. The answer I got as regards the 10 h.p. car, was, that I would have to wait three years for delivery. As regard the expensive model I could have one in two or three months time because orders were being cancelled. That, I am sure, is the case. I cannot understand the Chancellor standing up and contending that doubling the Purchase Tax on these vehicles has not involved any cancellation of orders.
When this matter was discussed previously, the Chancellor said that it would be much better if these expensive cars were exported. He expressed the hope on that occasion, which he has not followed up today, that these cars would go into the export market. But surely he cannot have overlooked the fact that motor cars, whenever they cross frontiers, are subject to Customs duties. Our motor cars which go overseas have to bear Customs duties in all countries, I think, and are subject to embargoes in some. In the Argentine there is an embargo at the moment on the import of British motor cars. The only country I know to which these more expensive cars are likely to go is the United States of America. There are not the people in the Continent of Europe today who can afford to buy these high-grade British engineering models, and if the Chancellor thinks that the demand for the high-grade British motor car is likely to be increased in the U.S.A. by crippling the home market here at the present time, I am sure that he is totally mistaken.
There are two points which, I think. are of much more importance than the raising of £1½ million of revenue in this way. I wonder if the right hon. Gentleman consulted the Minister of Supply upon the question of our war potential before he brought forward this proposal. We won the Battle of Britain in 1940 through the courage and skill of our pilots and the wonderful quality of our aeroplane engines. We should never have won the Battle of Britain in that

year had we not had the finest aeroplane engines in the world, and it seems to me to be of vital importance that we should not strike a blow at those firms which produce these high-grade products. In the second place, it is these high-grade products which are responsible for the high reputation of British engineering overseas. In every country in the world, even where people have never seen a Rolls Royce, they have all heard of one. It is, in fact, in the high-grade products, as we know, that our export trade in the future, If we are to do an export trade, must be done. We cannot compete with the foreigner in the cheaper lines. If we are to survive in this country we have to produce the highest quality, which will always command a market throughout the world.

Mr. Grossman: Is the right hon. Gentleman really asserting that no British car of under £1,000 without Purchase Tax can be a high-grade quality product?

Mr. Peake: I do not know what the hon. Member means.

Mr. Crossman: Shall I repeat it?

Mr. Peake: No. The class of car over £1,000, are the products for which this country has been famous in the past.

Mr. Crossman: And under £1,000.

Mr. Peake: Some of the smaller cars are quite good, indeed are very good, but they are, as everybody knows, mass-produced cars, and they are not given the hand finish which the high-grade vehicles, about which I am speaking, get.
This proposal is, in our view, a blow to the British motor industry. I can well understand that it may give some joy to the heart of the equalitarian levelling-down Socialist, that it may give some pleasure to the man who is filled with envy, malice and uncharitableness every time he see a high quality car go down the road. But in our view, it is not worth while, in order to satisfy those base passions, to deal a heavy blow, I would even say a fatal blow, at the highest quality engineering products which this country produces.

Mr. Crossman: I desire to make one or two points in reply to the right hon. Member for North Leeds (Mr. Peake). It is important that we should get in pers-


pective exactly what cars are affected and what cars are classed at over £1,000 without Purchase Tax. There are eight firms, I agree with the right hon. Gentleman, which are very seriously affected by this proposal, including one or two famous ones which he has mentioned. But it is quite grotesque to suggest that all the quality cars are affected. There are cars costing £850, £900 and £950 which are recognised as quality cars, recognised as semi-hand finished, though I know that the right hon. Gentleman on the other side of the Committee would not recognise as having hand finish any car costing under £1,000. They are, however, recognised outside this country as quality cars.

Mr. Peake: I think the hon. Member is thinking in terms of prewar prices, because a £900 car today would have cost only about £300 or £350 before the war.

Mr. Crossman: It would have cost £450 before the war. The cars to which I am referring—

Viscount Hinchingbrooke: Tell us what they are?

Mr. Crossman: I cannot give a list of the firms here.

Viscount Hinchingbrooke: Can the hon. Member not identify the cars?

Mr. Crossman: If hon. Gentlemen will tell me what car at £950 before Purchase Tax is a non-quality car, not worth selling abroad, they will be addressing themselves more to the point. I should be interested to know which motor car at that price they regard as a non-quality car.
Let us look at the facts of the situation. There are these eight firms working exclusively on high quality models and there are three other firms which also have models of the same type. When we are concerned with the export trade, let us remember that 75 per cent. of the total cars produced in this country and exported, are cars below the £1,000 mark. I am giving the very limit. I doubt whether 25 per cent. of the cars exported are over the £1,000 mark. Indeed, I heard only the other day in my constituency that one firm of the eight we are discussing, had succeeded in getting under 20 orders for the export of its top

model before this tax was introduced. From where are we really getting our sales in the export market? It is not, of course, in terms of bulk for these expensive cars. Our exports will succeed or fail on the medium horse-power car and to some extent, on the baby car.
I am not saying that quality does not matter. I am only saying that, in terms of bulk, our exports, if we are to make any money out of them, must be of the medium and low horse-power cars. We will have a useful adjunct in the sale of very expensive cars abroad. I would remind the right hon. Gentleman the Member for North Leeds (Mr. Peake) that quite apart from America there are, of course, Eastern European governments which are delighted to buy Rolls Royces. The only exports' we have made to Rumania are 11 Rolls Royces for the 11 Commissars of Rumania. I am delighted to feel that British workmanship is appreciated even by the Soviet commissars. On the other hand, I think that what I have to say justifies the decision to keep the tax at the £1,000 level. Over the £1,000 level we have only eight firms making these cars, and three other firms have a single expensive model. The three other firms will not be profoundly affected by the fact that their super-model will have a reduced sale in this country.
What concerns me is the size of the tax. I agree with the objection that 66⅔ per cent. is a crippling tax for these firms. I agree that quality does matter so long as we do not argue for it as providing the bulk of our exports. Quality matters to the industry. It has always been true that the quality car has led the way in development and design. I think we ought to consider, therefore, the preservation of the high quality car because it is vital to the development of the mass produced car as well. The correct way of putting this problem is to say, "Does a 66⅔ per cent. tax cripple the industry as a whole by threatening a close-down of the eight quality firms and thereby of the technical developments which are likely to come, in the first place, in an expensive car?" I am inclined to think that if this Purchase Tax were a permanancy it would have that effect. I am not so concerned about the cancellation of orders. I am much more concerned about rumours I have heard of skilled engineers beginning to say, "It is not worth working


for so and so. There is no future in this type of car. I will go into something else." That upsets anybody interested in the industry as a whole. If there is felt to be no future in the high quality car, then I think that the industry as a whole will lose.
The Chancellor says that there are only these grades of Purchase Tax. He can only make it 66⅔ per cent. or 33⅓ per cent. I feel that if a thing is important enough, if the Chancellor feels that 50 per cent. is correct and not 66⅔ per cent., he might well bring forward a special order, which I think would be necessary, to get this tax. It may be said that it is only a question of a few hundred pounds, but every hundred the right way would help. If he cannot do that, I think that the least he could do would be to tell the industry that this is not to be regarded as a permanency and that after this year some reduction will be made. I do not think that in the course of this year the sound firms are likely to go bankrupt. They should be able to carry on with exports. We have at least a few months more of the sellers' market. According to hon. Gentlemen opposite there is no question that we should be unable to export quality cars. During the nine or 10 months left there is no reason why the export drive should not be increased, if the firms are given an assurance that the home market has not been taken away in perpetuity. What they fear is that once the Purchase Tax is clapped on, it will stay there for ever because it is tempting to put taxes on and never take them off.
I do not think that the Chancellor's argument about tax reduction is really sound. If we are to choose between a high horse-power car with the penal Purchase Tax, and another under the £1,000 level, one will choose a cheap car rather than an expensive one. The sensible buyer will say "I will not buy a Rolls Royce now. I will buy another car for under £1,000." Many people will change their orders to cars below the £1,000. I think that we will have to face cancellation of orders in the home market. I do not think that they matter this year; the firms can carry on; but it will matter unless solid assurances can be given that this is not in perpetuity. Of coure, I would prefer to have a reduction to 50 per cent.

4.15 p.m.

Mr. Michael Astor: I find myself in agreement with the last part of the speech of the hon. Member for East Coventry (Mr. Crossman), Perhaps I can add a little to it in the form of a question to the Chancellor. If we assume for the sake of argument that this tax is sound from a revenue point of view, though I do not say that it is, I think the Chancellor will agree that if it cripples the industry, or sections of it, it thereby defeats its own end. I agree entirely with my right hon. Friend the Member for North Leeds (Mr. Peake) when he says that the home market for expensive cars will disappear when this tax becomes Jaw. Very few people will be able to purchase these excessively expensive cars. The hon. Member for East Coventry indicated that firms dealing exclusively in very expensive cars could carry on for one year with this tax in operation. That may be true. but there are certain qualifications. In the case of a firm like Rolls Royce, they also make aeroplane engines. They are not geared to make cheap cars, but they have another industry closely co-related to the motor production industry and, therefore, I imagine they could convert reasonably easily in order to increase production of aeroplane engines or cars. On the other hand, there are certain firms which are not geared to make cheap cars and which do not make things like aeroplane engines. I wonder very much whether they can carry on for the next 12 months. I dare say that they could carry on but, from a manpower point of view, they would be crippled or dealt a very serious blow.
My question is this. If the Government cannot guarantee very substantial markets abroad to these firms who have all their eggs in one basket, and I do not think they can. are they prepared to run this risk of crippling a certain section of the industry? I do not think that it is entirely the producers of expensive cars, who are of vast importance to the country, who will be crippled, but a certain section of this industry who have only one string to their bow. I hope that the Chancellor will give an answer to my question and to the second part of the speech of the hon. Member for East Coventry.

Mr. Scholefield Allen: On behalf of those of my constituents who are vitually interested in this matter, I


appeal to the Chancellor to pay heed to the argument of the hon. Member for East Coventry (Mr. Crossman). No doubt the Committee is aware that the production of Rolls Royce motor cars is now concentrated near Crewe. Prior to the war the production took place in Derby. A large Ministry of Supply factory taken over by Messrs. Rolls Royce now employs many thousands of skilled workers. I have had representations from the skilled workers in Crewe. I have passed those representations to the Chancellor. These workers are very concerned about the very heavy tax of 66⅔ per cent. They form a pool of engineers whose skill, once lost, once dissipated, will be very difficult to gather together again. There are not many engineers producing that particular high quality engine for which Rolls Royce and Bentley cars are famous throughout the world. We want to keep the quality that we possess in this matter, which is not a political question at all.
I do not think there is any Englishman, Scotsman, Welshman, or indeed, Irishman, who is not proud of these Rolls Royce and Bentley engines, and we all owe that firm a great debt of gratitude for its intensive research and for the amount of profits which it has set aside for research. That constitutes a great debt which this country owes to that firm, because, in setting aside profits, a firm like Rolls Royce was able to conduct further experiments in the engines to which perhaps we all owe the victory in the Battle of Britain. We do not want to lose these highly skilled engineers, a large number of whom are in my constituency. Branch after branch of the A.E.U. in Crewe has passed resolutions appealing to the Chancellor, and to me to make my voice heard with the Chancellor, because they fear that this tax will be a crippling tax. I dare say that a firm like Rolls Royce could stand on its feet for 12 months in spite of the tax, but if the tax is to be continued at 66⅔ per cent., I say that the age of the Rolls Royce and the Bentley has gone for ever.
I think the Chancellor has probably examined the prices of post-war cars. What do we find? We find a large range of cars up to £1,000, a few between £1,000 and £2,000, and then a very large

gap, which goes from £2,000 to about £3,500 or £3,700, which is the Rolls-Royce and Bentley category. That is roughly the position, with the exception of one Daimler, which comes just over £2,000. The effect of this tax will be felt in the weight with which it falls. The right hon. Gentleman the Member for North Leeds (Mr. Peake) said that he had information about the cancellation of orders. I have information which is right up-to-date. Very many cancellations have come into the Rolls Royce works. I do not want to mention the number, because I do not want to disrupt Rolls Royce, but a large number of cancellations have been received by the firm, and a large number of other people are also threatening to cancel. The question may be asked, "What about the export market?" There always is, and I hope there always will be, a large export market for the Rolls Royce car, but the fact is that, on the figures I have presented to the Chancellor—and I assure him that they are correct and reliable—we get 10 home orders for one export order for Rolls Royce cars. I have given the Chancellor some figures, and I do not want to give the Committee a complete statement, because I think the Chancellor has perused a complete statement which I have given him, setting out this case.
I have one suggestion to make to the Chancellor on behalf of these highly skilled engineers. If he cannot, by some special order, reduce the taxation to 50 or 45 per cent., will he consider the possibility of putting a tax of 33⅓ per cent. on the chassis, that is, upon the highly skilled engineering part of the job, and putting a tax of 66⅔ per cent. upon the body. The Chancellor is well aware that these bodies for Rolls Royce and Bentley cars are special constructional jobs which greatly increase the price.

Mr. Scollan: Will my hon. and learned Friend explain this point to me? Is it to the benefit of the country to expend all this first-class skilled labour on nine cars out of 10 for home consumption?

Mr. Scholefield Allen: That has nothing to do with it. Politics, or exports and imports, have nothing to do with it. This has to do with preserving this very highly skilled body of workers in my own constituency, who are very worried lest this


tax be continued indefinitely, and lest it should be a penal tax. We have no assurance that it will be reduced in the very near future, and this is causing a great deal of concern to these very highly skilled engineers. They have seen customers drifting to the lower-priced cars, and there is a real fear that we shall lose the potential and the great skill of these men.
In the past, this country has depended upon the skill of its engineers, and I hope that in future, we are still going to depend on their skill. This has nothing to do with politics, and I repudiate the suggestion that has been made from the other side of the Committee. My real concern is for the future of a British job which has been exported throughout the world, which has brought great credit to this nation, and which, I believe, contributed in no little way to our victory in the war. May I add one other fact? It has been suggested that perhaps the Rolls Royce firm could turn over to aeroplane engines, but, since acquiring their new factory, Rolls Royce have spent no less than £850,000 in tooling.

Sir Peter Bennett: I would like to refer to some of the speeches that have already been delivered, and, first of all, to some remarks of the Chancellor. The right hon. Gentleman suggested that there was a sort of over-all benefit to be obtained. We know that the proposals put forward by the motor car manufacturers, which have been adopted to a certain extent by the Chancellor, do benefit a large part of the industry, but the Chancellor, while giving with one hand, has taken away with the other, and he has not taken away from the people to whom he has given. The quality motor cars, by and large, do not benefit. It is the quantity people who benefit, and it is quite impossible to switch over suddenly from the one to the other. Some of the manufacturers who are making a few larger cars and a large number of small ones will, no doubt, be able to adapt themselves, but the makers of the class of car referred to by the hon. and learned Member for Crewe (Mr. Scholefield Allen), and others mentioned by the hon. Member for East Coventry (Mr. Crossman), are not in that position. In regard to loss of revenue, the Chancellor said that it was a good proposition for people to pay capital down and get it

back over a period of years. The right hon. Gentleman the Member for North Leeds (Mr. Peake) has shown that it will take 20 years to get it back in many cases.
The suggestion has been quoted from the "Sunday Times" that there is always a second-hand value to think about. Let me remind hon. Members that the second-hand value may be a terrible gamble, and that few people will put down a great deal of money in the hope that, when they want to realise, they will get most of it back again. Cancellation of orders has been referred to. It is very early to talk about cancelling orders, because the people who want special bodies on cars are used to being told that they will not get them for two years. Consequently, a man who has had a car on order for 12 months does not jump in at the first opportunity and say, "I will cancel it." He thinks about it, and waits. He says, "I have plenty of time; I will leave it, and, in the meantime, I will see what I can get." But I can assure the Chancellor that, as time goes on, such people will consider cancelling their orders. In some cases, the makers will not accept cancellations because they have already ordered the bodies for the cars.
4.30 p.m.
Whether people are makers or owners, they are all up against this new proposition. They do not agree with the suggestion of the motoring correspondent of the "Sunday Times," which has been referred to, that it will not be bad. People who are going to buy the cars think it is very bad. The hon. Member for East Coventry, of course, was right, but he was not referring to the same thing as the right hon. Member for North Leeds. When he refers to £900 cars, he is talking about high-grade cars. I drive one myself, and like it. When a buyer looks at the price of that type of car, and compares it with the price of the high quality car about which we are talking, and which costs anything from £4,000 to £5,000, he will not be such an ass as to pay that sum for something which is not considerably different from the £900 car. One cannot fool all the public all the time. The £900 car—I am speaking of present-day values with Purchase Tax added—is really semi-mass produced, whereas the high quality car is hand-finished, thoroughly tested out, and carries a special body.
It is the same with other things. Today many of us are content to get utility furniture, but we understand that if we want special hand-made goods we have to pay considerably more for them. It has been the boast of this country that we produce something which is really high-class, and there are always people who are prepared to pay for such a product. The hon. and learned Member for Crewe suggested that the high grade motor manufacturer did not mind going on under these conditions for a few months. I would point out that the motor manufacturer is a little suspicious when he is told that it is only for a little while. May I remind the Committee—and most hon. Members motor in some form or another —that we are still paying 4d. a gallon on petrol for the privilege of derating. The cost of derating was put on the motor car in the form of a special tax of 4d. a gallon on petrol, and we are still paying it. Every time we take a ride, we are paying that 4d. a gallon. Therefore, one can understand the motor industry being a little suspicious on being told that this extra tax is only being placed on it for the time being, and that one day a benevolent Chancellor of the Exchequer will take it off again. I have never met such a Chancellor of the Exchequer.
The hon. Member for East Surrey (Mr. Astor) suggested that people can swap over. They cannot. If a works is laid out to manufacture motor cars, it has to be completely stripped before it can produce aero-engines. The hon. and learned Member for Crewe pointed out that the Rolls Royce Company had taken their works from Derby to Crewe in order to make nothing but cars. These quality makers—and there is quite a number of them besides Rolls Royce, such as Daimler, Lagonda, the New Bristol, and a number of others—feel that they get no benefit whatever from the Chancellor's new proposition, and, indeed, that they suffer a good deal of harm, because it produces uncertainty. Every businessman knows that the one thing which must be guarded against is uncertainty. To suggest that only 10 per cent. of high quality cars are for export is to misunderstand the position. Such firms are exporting nearly 50 per cent. of their cars, and have undertaken to increase that percentage to 60 per cent.
At the present moment their order books contain only 10 per cent. for export because the export buyer does not wait for 18 months, as we have to do in this country. He asks the agents when he can have a car, and unless they can promise delivery in from three to four months. he does not order it. The reason they can quote delivery is that Rolls Royce and other quality car manufacturers all put through 18 months' supplies in order to get going. The result is that they are putting through 10 times the quantity which appears on their export order books. But as time goes on, nine-tenths of the bulk supply are taken for export. That is the insurance which a manufacturer has to have. It is very difficult to get people who are not manufacturers to understand the importance of that insurance. That is why there has to be a home market.
It sometimes happens that there is a close-down of the foreign market until certain alterations in design are made. Meanwhile, those cars which would have gone for export are sold in the home market. The revenue comes in, the alterations are made, and export begins again as soon as they are ready. A firm cannot run a purely export business; it must produce the quantities. That is why these manufacturers are so concerned. As has been said, in the Rolls Royce car we have today something which is acknowledged to be the best in the world. For 30 years a particular car manufacturer has advertised the best car in the world, and nobody has contradicted him. It is admitted. I was on the committee appointed by the President of the Board of Trade—

Mr. Scollan: Would the hon. Gentleman please clear up the point raised by my hon. and learned Friend the Member for Crewe (Mr. Scholefield Allen), who made it quite clear that his information was that only 10 per cent. of the production of the high quality firms was being exported? The hon. Gentleman is now claiming that 10 per cent. of the orders on the books in no way represents the true figure.

Mr. Scholefield Allen: On a point of Order. I would like to point out that that was not what I said. I said that of the orders on the books, only one in 10 was for export. Orders on the books have nothing to do with the percentage which is, in fact, exported.

Mr. Scollan: If my hon. and learned Friend will look at his speech in the OFFICIAL REPORT tomorrow, he will find that he said one in 10

Mr. Scholefield Allen: On the books.

Mr. Scollan: Not on the books. The hon. Member for Edgbaston (Sir P. Bennett) has now told us that not one in 10, but actually the whole production is going abroad Someone must be wrong.

Sir P. Bennett: The hon. Gentleman has got us both wrong. I was confirming what was said by the hon. and learned Member for Crewe that 10 per cent. of the orders on the books at any one time are for export. Actually, the quantity going overseas is in the neighbourhood of 50 per cent., and it is going up to 60 per cent. There is no question about that. In fact, I know that the Minister of Supply will confirm it. Of the Rolls Royce output, 50 per cent. is being exported at the present time, and the firm have undertaken to increase their exports to 60 per cent.
The point I was going to make was that here we have the No. 1 exhibit in the world. On several occasions I was on committees appointed by the President of the Board of Trade to organise overseas exhibitions. In every case the British prestige pavilion asked to have a chassis of that particular make, and, later on, an engine, because it was the one thing that is talked about all over the world as the highest example of engineering finish. I do not want to see that endangered. It is of immense prestige value. Why did the Government go to the expense of having these prestige pavilions in exhibitions in different parts of the world? The reason was that they were regarded as an advertisement for the rest of the products of this country, and that is what is happening today with these high-class vehicles. There is in that industry a reservoir of skilled labour which is found nowhere else. Twice in my lifetime we have seen that switch-over to the production of aeroplane engines, and twice we have thanked God that we had a high-class engineering industry to switch over. We do not want anything to hinder that industry. Let no one run away with the idea that it is a small matter merely because the numbers are small. Re-

member that the price, at £4,000 to £5,000, is equivalent to the price of 10, 20 or 30 of the cheaper cars. I know that the tooling equipment charges of the three or four factories which are making these high-class cars have run into several million pounds. It means that the labour must be highly skilled, and it is very valuable.
Can one imagine the Swiss throwing away their high-class watch' trade by imposing a penal tax on the watches which they sell at home, when the export market is temporarily held up? I am alarmed at the suggestion that we are going to endanger the position of our high-class motor industry. Those manufacturers say, "Leave us as we were; we do not want the £10 tax; we would rather go on as we were, paying the high registration duty and the 33⅓ per cent." That is one alternative. The other is that which was mentioned by the hon. and learned Member for Crewe. If the Chancellor must retain the magic figure of 66⅔, why cannot he apply it to the special bodies and let us have the engineering at the basic price? It is the engineering with which we are concerned. I should hate to hurt the coach builders, because they are craftsmen of the highest order, but I am anxious that, above everything else, we should maintain our standard of engineering and that we should not throw away the finest engineering trade in the world. I hope the Chancellor's mind is not closed. He will not get much out of this tax. It is a gesture, and a gesture which will harm a great deal more than it will help.

Mr. Viant: I intervene in this Debate because I have in my constituency a firm which is engaged in the production of this type of car to which reference has been made. Representations have been made to me by the engineers who are a highly skilled class of men. From the practical point of view when a firm has gathered these skilled men together and has formed a pool of expert engineers, it is exceedingly difficult for that firm if it has to allow those men to go elsewhere. Since the war these firms have had a considerable amount of difficulty in gathering together the men who were in their employ in prewar days, and they have made it clear to me that if this 66⅔ Purchase Tax remains, it will be impossible for them


to carry on their business. I understood the Purchase Tax was introduced to deter people from making purchases This tax of 66f per cent. will, undoubtedly, achieve that purpose. We ought to make up our minds whether we, as a nation, desire this type of car to be produced or not, and whether it will be for the benefit of the nation if we permit this highly skilled work to be performed. If we make up our, minds that we no longer need that kind of work, let us continue with this deterrent tax.
4.45 p.m.
On the other hand, I am informed that we cannot afford to allow this type of work to pass out. Speaking as a craftsman myself, I deplore the mass production method. I know it has come to stay, but I would like to see retained facilities whereby we shall be able to encourage and train the highly skilled craftsmen. It has an effect not only upon the industry of the country, but upon the character and personality of the individual. We cannot afford to throw these things lightly aside. Therefore, I appeal to the Chancellor to reconsider this tax. It is too high. His arithmetic this afternoon has been proved to be erroneous, in so far as even the period of 10 years to which he referred does not permit the purchaser to make good on the reduced horse-power tax. The capital outlay for a large car of this kind, with such a large tax, will mean that 20 years will have to elapse before a purchaser can recoup himself from the lower engine tax. I hope the Chancellor will give heed to the appeals which have been made. I feel that I would have been lacking in my duty to my constituents if I had not made this appeal to him.

Sir Arthur Salter: I wish very briefly to make two points which have a certain connection with each other. First of all, I am disturbed about the probable grouping of the price levels around the £999 figure. There may as already suggested in this Debate be reductions from £1,000 or a little over to £999,I do not see any harm in that, but I am disturbed at the possibility that the prices of cars in the £850–£950 class will climb nearer to £999, because the seller will be able to sell to the client the advantage of a reduction on his flat rate licence compared with what he has

been paying on his previous car, and, at the same time, will be able to assure the client that he will not have to pay the increased Purchase Tax. My other point is this. The Chancellor's counterpart to his increased Purchase Tax, and his reduction in the flat rate on new cars, is a continuation of the full rate of the licence paid on existing cars. That may, be perfectly fair in regard to, say, a licence fee of something like £30 on a moderate powered car, when it is a new car with the value, the utility and the reselling value of a new car.
But there comes a time when a car of that kind begins to approach the end of its utility and has greatly lost its value for resale. I have seen in the past, even before the war, cases in which cars with several years of good driving still in them could not be used because the original owners did not want to use them, and when they tried to sell the cars the annual licence fee was so big in proportion to the value of the cars at that moment, that they could not get rid of the cars and they were scrapped. I suggest that it is in the public interest, and will continue to be for some time, that existing cars should live out their natural life of reasonable usefulness, without being prematurely aged by a tax consideration. I wonder, therefore, particularly as the Chancellor of the Exchequer, as my right hon. Friend remarked before, has a considerable balance in hand in his revenue proposals on this question, whether he could not use a little of the excess to lower the rate of licence fee on existing cars as they pass beyond a certain age. The 10-year-old car paying a very high licence fee is, in my view, paying much too highly in relation to its value or selling price on the second-hand market. I do suggest that there is a very real case for some relief there, particularly when the discrepancy is being brought into such prominence by the flat rate licence fee for all new cars.

Mr. Christopher Shawcross: It seems to me that the hon. Gentleman the Member for West Willesden (Mr. Viant) put his finger on the crux of the problem that we are discussing when he said that this Committee must decide whether we want this type of car to be produced or not. I take it as obvious from all the speeches that have so far been made, that we want to continue—in fact,


We want to encourage—the production of quality cars, because we see that, in the long run, they are the most likely to be a permanent factor in our export trade. It seems to me that this tax is a discriminating tax; and that, therefore, although it will not have the same influence as the repealed horse-power tax, it is open to precisely the same objection: it is discriminating between one type of car and another, or between one class of car and another.
I do not wish to discuss the merits, because I do not think this is a fit place to discuss the merits of individual makes of cars. But the fact is that, whatever else the motor industry in this country may or may not have done, it produced in the Rolls Royce car a product which is the best car in the world—a product which, in the opinion of all quarters and in all countries significantly, is acknowledged to be of superlative quality, something of unequalled quality in engineering. Its name is a phrase which has passed into the language—not only English, but others —and which is metaphorically used to describe the best in manufactured goods and other things of all types. Therefore, it is clear that we want to encourage, and not to discourage. For the reason I have mentioned, that in the long run—and, it may be, in the short run—it is these quality cars which are likely to be most useful to us in the export trade, I suggest that this increase should be reconsidered. Even if the Chancellor of the Exchequer cannot go so far as to say that he will reconsider it to the extent of not having the extra tax at all, of not having any discrimination at all, I should like to support those who have said it should be at a less steep rate of increase. such as 40 per cent. to 50 per cent.

Mr. Orr-Ewing: I was alarmed when this Debate started, to hear the Chancellor of the Exchequer use an expression that I do not think can be fairly attached to this particular class of cars from the engineering angle—that they are "luxury" cars. We are not at the present moment talking about luxury cars at all, and I think that every subsequent speech to that of the right hon. Gentleman has made that quite clear. We are, in fact, talking about a very high-grade engineering product, and it would not matter if it were something other than a motor car. We are talking about a high-grade British engineering product. I

should like to bring to the notice of the Committee the effect that the proposals of the Chancellor of the Exchequer will have on a class of firm I am going to mention, that is to say, on those firms that really depend on the production of one class of motor car alone, and not on a variety of models.
I know one firm, which the Chancellor of the Exchequer knows of very well, which made for itself a great reputation in producting aero-engines and aircraft and all sorts of things like that, who were definitely encouraged by the Minister of Supply to keep their extremely highly skilled workers together; and in order to do that they were encouraged to produce a particular model of motor car. It is the only model they produce. Now the Chancellor of the Exchequer comes along and says, "I know nothing about this; I am going to hit your new product sideways." That firm had previously not produced motor cars, though they had produced aeroengines; and they spent a considerable sum of money in preparation for the production of this car, and so tooled up the job as to enable them eventually to reduce the price of it, it may not be below £1,000, but to reduce the price to the home market and to the export market. The effect of this proposed additional tax, in a case of that sort, is really catastrophic. A firm having no prewar reputation in the motor car market is in a far more difficult position than one that has a prewar reputation in the export market and in the home market, and I think there is no possible doubt that those people will suffer dire consequences. Moreover, those highly-skilled men engaged in the production of this motor car will be dispersed, and that against the wishes of another Department of the Government which has urged that they should be maintained together.
I really wonder whether the Chancellor of the Exchequer took into full consultation his colleague in the Ministry of Supply before the proposal was put before Parliament. It seems to me to be a most extraordinary thing. All of us engaged in industry have had conversations with Ministries as to what we could or could not do under certain circumstances. This firm said that they would do certain things to maintain production and to maintain it at a certain rate. Then the Chancellor of the Exchequer comes along and


knocks that firm sideways, and makes it impossible for them to maintain their arrangements with another Ministry. That is not sound practice. It is not common sense.
I cannot help feeling that those who have struck a would-be optimistic note as regards the possibility of maintaining these cars in production have not really understood the manufacturing problem at all. It has been proved over and over again, that it is quite impossible to produce for the export market only. The reasons have already been given to the Committee. But let us take the picture as' it will exist if this proposed tax goes through. Not even the Chancellor of the Exchequer would deny that sales of cars for export of these classes are likely to fall. Quite obviously they are likely to fall. They will fall even more rapidly if the cost of the cars in the export market rises. A number of cancellations will be made. One cannot possibly plan production of motor cars at one rate, and then if the rate of production is cut down by one third or one half as a result of the tax, maintain the cost of production at the previous level. It is not common sense, and it is not practical, if the whole production rate of these motor cars is lowered. Therefore, the price is bound to go up on the export market. I cannot really think that that is going to help our export trade.
We have heard a good deal about the export trade; over the next few weeks we are going to hear a great deal more. I think by this tax the Chancellor of the Exchequer is damaging the prospects of the export trade and the prospect of these motor cars overseas. I would ask him, for this reason alone, to look at this matter again. I do not believe modification of the increased tax is going to be of any value in the matter. I believe it is a question of taking it off, or putting it back to 33⅓ per cent. I think that is the only way to deal with the problem. I shall vote against the 66f per cent. proposal. I ask the Chancellor to look at this again very carefully indeed. He will do far more than discourage the use of luxury motor cars on the roads of this country. That has nothing to do with the problem, as I think he would admit to the Committee. It may be that some hon. Members would like to see luxury motor cars taken off the roads. Well, I hope it is not in that sort of spirit that

this matter is being approached. This is a discriminatory tax against an extremely important national asset, the most highly skilled and valuable branch of engineering in this country, and, as such, is an attack on the craftsman.
5.0 p.m.
I was delighted to hear what was said about craftsmen by the hon. Member for West Willesden (Mr. Viant), who spoke as a craftsman. The Chancellor's colleague, the Minister of Labour, said something the other day which gave great encouragement to some of us in industry. He then seemed to take an interest in craftsmen, and it was very helpful to hear those words from a Minister of Labour. Cannot the Chancellor speak to him about whether it is worth while doing something which will damage craftsmanship? There is no possibility whatsoever of our being able to compete with the American producers, to any great degree, in mass-produced motor cars in overseas markets. But we can, and shall always be able to, compete in the high-quality product, which is the best advertisement in the world for British engineering. I hope the Chancellor will say that he will change his mind before he does too much damage.

Mr. Douglas Jay: I hope the Chancellor will stick to this tax. There has been only one substantial argument advanced against it today, and that came from the right hon. Member for North Leeds (Mr. Peake), who pointed out that the Rolls Royce company and organisation is a national asset from the war potential point of view. I fully agree with that. I think that if we had not had the Rolls Royce Spitfire engine in 1940 we might well have lost the war. If I thought this tax would damage the Rolls Royce organisation and their production of aircraft engines, I should be against it, but I do not believe it will. I do not believe any real evidence has been advanced to support that contention this afternoon. I say that for three reasons. In the first place, surely the Rolls Royce aero engine manufacturing and research capacity in future will be much greater than it was before the war. The firm are now engaged much more in the production of aircraft engines as against motor engines than before the war. Secondly, we shall have a very large export trade in high quality motor cars. Thirdly, there will surely still


remain some market in this country amongst those persons who are still able to pay these very high prices? I suggest that, so far as we can tell at present, those three possibilities together will preserve what is admittedly a very great national asset.
It may turn out that nobody, or at any rate, very few people, will be able to pay these prices in the home market. But we can discover that only from experience; and, therefore, the Chancellor would be well advised to keep this tax on for a year or two. Of course, if experience shows that serious damage is being done to the home market, there would be a case for reducing the tax; but we do not know that in advance. Obviously, this is not, as some hon. Members seemed to suggest, a malicious or spiteful tax. It is one designed to raise revenue, and if it did not raise revenue, the Chancellor would take it off. I think that in this controversy, however, we are all losing sight of what is, after all, the background of the whole matter. Surely, the original, much abused, horse-power tax was imposed 20 or 25 years ago as a form of luxury tax. [HON. MEMBERS: "NO."] Well, it was imposed as a tax which would fall more heavily on the more high powered car than on the less high powered car.
Speaking as a former small car-owner— that is to say, somebody who could afford a small secondhand car before the war, but who cannot afford any now—I have been watching the Chancellor's proceedings in the last few months with some suspicion. What have we done? We have accepted the argument of the motor industry, that if the cubic capacity tax is abolished and a £10 flat rate tax substituted, they will be enabled to produce a new sort of car, which can be exported on a very large scale. That is a strong argument, but I have never been convinced myself that, as a result of doing that and nothing else. we shall increase enormously our motor car exports. Even though the Chancellor was right to accept that it is not a certainty. It is a gamble, and in order to make that gamble, in order to obtain that hypothetical advantage, we have been asked to shift the taxation from the more wealthy motorists on to the shoulders of the poorer motorist. It is quite clear that the motorist with the larger car would be better off as a

result of this change if the Chancellor did not raise the Purchase Tax.
The dilemma has always been that either we increase the petrol tax—and I think we all agree that would do very serious damage to industry and trade as a whole—or else, in effect, we make a quite material shift of taxation from the shoulders of the wealthier motorist. As I see the position, the Chancellor has very ingeniously escaped that dilemma by adding this Purchase Tax on to the more expensive car. It is an ingenious solution, and I do not think the arguments advanced against it this afternoon have any force. Unless and until it is shown by experience—and it is my opinion for what it is worth that it will not be so shown—that organisations such as Rolls Royce will be seriously damaged, I hope that for the time being the Chancellor will stick to the tax.

Mr. Digby: I think I was a little unfortunate that the hon. Member for North Battersea (Mr. Jay) spoke—I may not have heard him aright —as though in the present flat rate proposal we were shifting the burden from the richer to the poorer motorist. The practical effect will be that he is far worse off than before, so I do not see how that question arises.

Mr. Jay: Since the hon. Member challenges my argument, surely it is clear that somebody who runs a 20 or 25 horsepower car will be better off than before?

Mr. Digby: Yes, but the hon. Member has not shown how the person running the eight horse-power car will be materially worse off. It is unfortunate that in the discussion this afternoon so much attention has been paid to one particular make out of the 11 affected, namely, the Rolls Royce. It was unfortunate that the Chancellor, in his opening remarks, spoke as though he was thinking only of Rolls Royce and not of other makes of car. I was rather surprised at the arguments he put forward to justify this double Purchase Tax. He argued that those who bought these expensive cars would, in spending less on the annual tax, get back almost as much as they would lose on the increased Purchase Tax. I have not had time to work out many examples, but while he spoke I did work out one simple example. Take the case of a very high-performance 16 horse-power car, the


ordinary taxation on which would be £20 a year. With that car it would take 10 years to save £100. The extra Purchase Tax on that car is £417, so it would take over 40 years to work off that amount. I am very glad that the Chancellor has this splendid confidence in the lasting capacity of British motor cars.
When we come to the other end of the scale, taking the Rolls Royce, the figure works out a little bit better, but I implore the Chancellor of the Exchequer not to fix his attention on the Rolls Royce, because there are 10 other makes of cars involved, among which are four of a completely new design, which in every way are excellent, and which are on the lines we should like to see the British motor industry develop. It would be a very unfortunate thing if the Chancellor of the Exchequer were to prevent these models from coming into full production. It has been pointed out already that we cannot ignore the effect on the home market, and that was the very reason why the flat rate was advocated. It has been universally admited that the home market does affect design, and what we want to see is design improved. There is a tendency for the design of the cheaper cars to improve, and to follow the design of the better makes.
There is another aspect of this matter which should not be lost sight of, and that is the improvement in prestige of the British motor industry abroad. The prestige of one particular make has already been stressed, but there is the prestige of other makes to be considered. In the long run, when the sellers' market ends, whether or not we can sell our cars abroad will depend on the prestige of British cars in general. There is no doubt that we need to send abroad, especially to Europe where such things are appreciated cars of smart appearance. Of the 12 models which are affected several are of a kind which will undoubtedly appeal to Continental taste. I have four particularly in mind.
Then there is the question of performance. There is no doubt that people on the Continent appreciate good performance, and that can be seen by the attention which was given to models of good performance at the Geneva motor show. The French, for example, have produced an excellent model with an extraordinarily high performance, and Italy has

brought out at least three excellent new models. If we are seriously to compete in this market, we must be able to match their performance, and I doubt whether the cheaper cars will be able to match that performance, if the way is not piloted for them by these more specialised firms. I wonder whether the Chancellor, who is a busy man, has had time to look at the results of the Grand Prix races abroad. If he has had the time, he will no doubt have been depressed to find the Italians winning again, and the British cars not taking their rightful place in these races. Among the cars he is hitting most are just the kind of models which could put up an excellent show in these races, and I ask him to bear that aspect of the matter in mind.
The proposal made by my right hon. Friend the Member for Oxford University (Sir A. Salter) merits attention. I am referring to the very old cars. It has been estimated by experts that we shall be very short of cars in this country for at least four years. If that is so, it will mean that a large number of old cars will have to remain on the roads; some of these cars will be in a pretty poor condition. The man who will buy the old car will probably be the man who cannot afford to pay for a new car. Up to 1935, there was a tax remission on all very old cars, and I suggest that the Chancellor of the Exchequer should consider a remission, say, after 15 years, which would be of great use to the owners of veteran cars, who otherwise will have to pay the extraordinarily high tax.
In conclusion, I ask the Chancellor once again not to consider so much the Rolls Royce and the very expensive types of cars, but those very excellent cars which are being developed now, in most cases by firms which are not very large, because if he strikes a blow at these, he will be doing very serious damage to the future of the British motor industry.

5.15 p.m.

Mr. Dalton: I think it would be convenient for me to say a few words at this stage on the speeches which have been made from both sides. We began the discussion on motor taxation this year on the basis—although I did not make any change in my original Budget proposals—that I was willing and prepared to consult with hon. Members in different parts of the Committee and the interests


concerned on what scheme of taxation would be for the greatest benefit of the motor industry and general public, providing always that I did not lose revenue this year. That was the basis. The discussions proceeded, and a number of suggestions were made to me, and I, for my part, made certain suggestions, of which this is only one—I will not deal with the others. Part of the plan was that if I lost revenue on the one side, I had to pick it up on the other, and this is the proposal to pick it up on the other. The only alternative proposal to pick up this amount is that of an increased petrol tax, which no one has advocated. Therefore, we began by considering this as a means whereby I could this year pick up approximately the same amount of revenue—that is, within £500,000—as I was losing. In order to complete this point, I would mention that in the years ahead I shall progressively lose more revenue, because the proportion of cars falling out of the lower annual licences will steadily increase, and the greater the prosperity and success of the motor industry, the more that number will increase.
The argument has been put that this double Purchase Tax, above the £1,000, will do great damage to certain branches of our engineering trade. That argument has been persuasively put by several hon. Members. If I were convinced that this really would strike a blow at an essential part of our skilled engineering craftsmanship and the industrial equipment associated with it, I should indeed be concerned, but I am not yet quite convinced of it. I think the argument comes partly from a slightly pessimistic view of the possibilities of the export trade at the moment. We are considering the present Finance Bill at the moment. As hon. Members know, Finance Bills come once a year, but in between there are possibilities of adjusting such matters, if the proof should really be forthcoming that it should be done.
Yesterday, we were speaking of the great importance of the export drive, but no one has said anything to that effect today. It is extraordinary how, like a lake, which is sometimes disturbed by a great storm and at other times quite still, the mood of the House can quickly change from grave apprehensions such as we had yesterday. It is no good the right hon. Gentleman the Member for

West Bristol (Mr. Stanley) shaking his head, because he was one of the protagonists in yesterday's Debate. Everyone was convinced then that to expand exports was one of the most immediate and important national duties.

Mr. Stanley: I do not think that the right hon. Gentleman is being quite fair. The case which Members have made today is that they do not believe that this tax will lead to substantial exports.

Mr. Orr-Ewing: May I remind the Chancellor that I mentioned specifically the danger to the export drive which would arise out of this tax?

Mr. Dalton: Whether the hon. Gentleman used those words or not, it is the case—and I am not scoring a debating point—that whereas yesterday everybody was all out for exports, today we are being told that it is the home market that is important. This year we must go flat out for every export we can get. I have had a memorandum from Rolls Royce, and, through the kindness of my hon. and [earned Friend the Member for Crewe (Mr. Scholefield Allen), I have been given further material. I mention this firm because they have gone to great lengths— and I am grateful to them—to set out statistics of their own production and prospects. Of course, other firms are concerned, but what do Rolls Royce say? Their memorandum is dated 4th July, so that the figures about cancellation of orders are quite up to date. They say that between the wars they averaged 1,000 cars per annum, of which only 10 per cent. were exported. That is no good to us now and, of course, Rolls Royce are aware of it. They say:
Production is now of the order of 20 to 25 cars a week, the ultimate capacity of the factory being 50 a week. Forty-three per cent. of our production has been exported to date, and we shall shortly be increasing this figure to 60 per cent.
That is in accordance with the agreement reached between my right hon. Friend the Minister of Supply and the industry as to what should be the minimum percentage figure for exports. Sixty per cent. of 50 cars is 30, and Rolls Royce are aiming at 30 cars a week. They speak of their orders, and say:
We have orders outstanding at present for about 3,300 cars, of which 300 are for export.
Therefore, 3,000 out of their 3,300 are for the home market. They speak of cancellations, and say:


Since the announcement of the imposition of 66⅔ per cent. Purchase Tax, 82 orders have actually been cancelled on this account, and about another 100 customers are threatening cancellation. This, of course, is not a large proportion of the total order book.
The prospective weekly production of Rolls Royce is 50 cars, of which they hope to export 30. They should be able to export 30 a week for some time to come, because they say they have 300 orders for export. This double tax cannot affect export orders, because none of the persons taking an export order will pay Purchase Tax. Even if Rolls Royce do not get additional orders for export, they have 300 to work on, and they are working up to a maximum of 30 per week. I am taking the short view, deliberately. I ask, is their home market in serious danger? They have 3,000 orders on their books; 82, possibly a further 100— let us say 200 altogether—of those 3,000 have been cancelled, leaving 2,800 home orders. They are working up to an output of 50 cars per week, of which 20 will be for the home market. That is a solid cushion for 12 months ahead, and I am not surprised that my hon. and learned Friend the Member for Crewe, who stated their case moderately and reasonably, should say that Rolls Royce can stand it for 12 months. I am sure they can.

Mr. Stanley: Has the right hon. Gentleman the cancellation dates, because it is important to know whether people are cancelling cars for early delivery? They may not take the trouble to cancel an order for delivery two or three years ahead.

Mr. Dalton: The firm have not divided their figures in that way. But we know that there is a very big unsatisfied home demand for cars of all types and makes, and I think it is clear that this is a solid basis for the next 12 months. I do not think it can be shown, on the statement of the firm, which is reasonable and well laid out, that this tax will dry up their home market during the next year.

Mr. Bowles: My right hon. Friend quoted the "Sunday Times" of the Sunday before last—the day after he made his serious statement about a possible cut in petrol. Has he any idea whether that statement may have had anything to do with this cancellation of orders?

Mr. Dalton: It may have had, but I do not know. My statement on petrol was deliberately phrased, so as not to commit us to a reduction in the private motorist's ration. My statement made it clear that the Government were primarily going out to see if we could achieve economy in the petrol issued to the Services, and that issued to commercial users, large quantities of which, it is notorious, slip through into the black market, and which is in excess of their legitimate needs. Since the private motorist was not specifically mentioned, I would doubt whether it had much effect. But I was taking the short view. If it be the case that the home market is not sufficiently buttressed, the figures I have mentioned do not show it.
I must point out that we cannot afford in the state of affairs we discussed last night, to let great quantities of steel, together with the work of our best craftsmen, go into the production of these expensive cars in order to have them run about the roads of this country. That is not the state of mind in which we ought to approach this problem. The hon. Member for Western Dorset (Mr. Digby) from whom I shall be glad to receive particulars, said some hopeful things about the good performance of many of our more expensive cars. I agree with him. He said that that should lead to good export possibilities, and I say that we must not swerve away from our constant concentration on increased exports. I would be happy if a number of these motor firms could go above the 60 per cent. figure. I am talking now about immediate and short-term national necessities. Therefore, bearing that in mind, I am not prepared at this stage to modify this proposal.
5.30 p.m.
There is power in between Finance Bills to make Treasury Orders relating to the Purchase Tax and the Purchase Tax rates. We are always reluctant to make these orders too freely because it is not in accordance with the proper financial procedure of the House, and if carried too far, it might be an abuse of it. But it can be done, and it has been done. As the law now stands, we can only have the Purchase Tax at certain specified rates; none other will be legally possible. The right hon. Member for North Leeds said that we could continually modify Finance Bills to allow for a wider range of operation, but


I think that that would be complication without profit.
The offer I make, in complete frankness, particularly in the case of those who have raised the case of other cars—the Rolls Royce case has not convinced me at all—is that if there is evidence that can be produced of a more convincing character from other sources, I will be glad to have it. I have the power, subject to the approval of the House, in between Finance Bills to introduce Purchase Tax orders modifying the Purchase Tax. If I am convinced, by evidence produced in the course of the coming year —in the light of experience and not in the light of anticipation—to that effect, I am prepared to make a Purchase Tax Order, but it will have to be a reduction of Purchase Tax by an adjustment which can be done between Finance Bills, and it must, therefore, be a reduction to 33⅓ per cent. That is the offer I make. I am not convinced by the arguments up to date, and I think that we should adopt the proposal I have made, but I am willing, if evidence is produced during the course of the year, to make a Purchase Tax Order on the lines that I have indicated.

Mr. Stanley: This has been an interesting Debate on a most important matter. Although the right hon. Gentleman showed signs of wishing to respond to the Debate, I must confess that I am not satisfied by the offer he has made. It seems to me that the case made from all parts of the Committee—and there were still hon. Members rising, and I hope that they will rise again to put their case—was all upon one side. The only wholehearted support which the right hon. Gentleman had was from the hon. Member for North Battersea (Mr. Jay), who is fast becoming regarded as the Gunga Din of the Front Bench. It is from the hon. Gentleman's speech, I think, that the Chancellor has got the idea of the offer he has made. The hon. Member for North Battersea, with great frankness and some courage, said that he was prepared to take a gamble. He did not believe that this would ruin the industry, but he was prepared to have the tax on to see if it did ruin it, and if it did, to take it off again at a later period.
The fault of the right hon. Gentleman's reply was that he confused the issue. He

certainly confused me as to what was the purpose of this tax. He started by saying that it was a balancing tax, which he was giving to the motor industry in response to their demands—a gesture for which all of us should be grateful. He was giving them a certain amount of money, but in the end he had to have that money back. This was the way he was going to get it. Later in the Debate he made it quite clear that the object of this tax was to provide more exports. The right hon. Gentleman cannot have it both ways. Purchase Tax is not paid on cars which go to export, and he cannot, at the same time, have an increased export trade and get from this tax the money he requires to recoup him for the allowances he is making elsewhere. So far as I am concerned, he must resolve for himself his own intellectual ambiguity. I am interested only in the consequence of this proposition.
I think that the amounts for this year are so small that if this was proved for other reasons to be a bad tax, the Chancellor could well do without the not very large revenue which it will produce. To me the real importance of this tax, and the only argument for it, if it can be supported by figures, is that its effect may be, by making the home market more difficult, to drive more and more of this type of car into the export market. It is on that basis alone that I shall believe this tax to be justified. We have had no evidence produced to us by the Chancellor that that will happen. We have had, on the other side, a good deal of indication that we are likely to have the reverse.
The right hon. Gentleman has fairly read out an important document, but a document coming from one firm—a firm which, I agree, in reputation stands ahead of all others, but a firm which, because of its world-wide reputation, is likely to be affected differently from any of the other firms. My information is that the rate of cancellation with some of the other firms is far larger than that with Rolls Royce. The cancellations in the case of one firm amount to over one-third. The agents for other firms say that their cancellations have been 100 per cent., and I think that there is a great deal of evidence that in the other firms, if we exclude Rolls Royce, the damage to their home market will be very extensive. Is the right hon. Gentleman really convinced of this


damage to the home market which, after all, if it is followed by increased exports damages no one but the potential buyer of the big car? It does not matter to the producer. It is of advantage to the nation if instead of selling to the consumer here he can sell it abroad.
Can this gap really be met by an immediate increase in the export of these cars? My information is that it cannot. The export of these cars, although important, is always a small proportion. For many of these cars there is no long waiting list abroad, and there is no probability that we shall immediately be able to switch over to the export market the very substantial number of orders that undoubtedly we are losing in the home market. This is a vicious circle. If the total sales are to be less, it will mean a bigger share of the overheads falling upon what export trade there is, and a rise in export prices which will lead, in the long run, not to an increase but to a decrease of exports. Therefore, I am certainly unconvinced— I have heard nothing yet which does convince me—that the effect of this tax will lead to any increase in exports. One final point. The right hon. Gentleman in his winding up made a great deal of play with the fact that of the Rolls Royce output only 10 per cent. went in exports.

Mr. Dalton: Prewar.

Mr. Stanley: The right hon. Gentleman talked about not being able to spend a great deal of steel in order to allow people to drive from place to place in these great rich cars, and he was cheered, I noticed, with almost equal volume by the hon. Member for West Fife (Mr. Gallacher) and the hon. and learned Member for Gloucester (Mr. Turner-Samuels).

Mr. Turner-Samuels: The right hon. Gentleman must withdraw the latter part of what he said.

Mr. Stanley: I did not accuse the hon. and learned Gentleman of cheering me, but of cheering the Chancellor of the Exchequer.

Mr. Turner-Samuels: I was not cheering anybody.

Mr. Stanley: If the hon. and learned Gentleman denies that he was cheering the Chancellor of the Exchequer, I withdraw the unfounded and grave allegation. That

is an easy political case to make, an easy thing on which to get cheers—that we cannot afford steel to build this kind of motor so that people can drive about in them. It may well be true, but why has it suddenly been found out today? Why did not the Government find it out two years ago when these very firms were encouraged by the Ministry of Supply to restart the manufacture of these cars and also were encouraged to make new cars? The Minister of Supply or his agent did not say, "We cannot afford to give you the steel to make these new and expensive cars in which people can go about, but, all the same, we want you to make them." They asked these firms to make these cars because it was to the national advantage as well as for other reasons that they should be made.

Mr. Follick: Were not the expensive cars for export and not for this country?

Mr. Stanley: It was certainly the intention that a proportion of these cars should go to export, but a certain proportion were to stay in this country. Our contention is that it is not possible to increase the exports by the exact amount to compensate for the fall in the home market. It is said we are imposing a tax upon the home market to increase our exports. If we can do that, I think we are all in favour of it, provided it is done without any damage to the company, damage to the engineers and damage to the production. What I am protesting about is the introducing of something into a technical argument which can only be introduced to create bias, and that is talking about rich cars driving about the countryside for which we cannot afford the steel. I say that if that is true, or if the Chancellor of the Exchequer believes it, he ought to have stopped it two years ago and not encouraged these people to spend millions of pounds on new tools and jigs for cars, which they were then told were wanted in the national interest, but which they are now told are a waste of steel.
I hope that even at this late hour the right hon. Gentleman will reconsider this proposal. He has made this offer that if this rains these companies then he will take the tax off again. Certainly I am not content to leave the fate of these companies, even excluding Rolls Royce,


to the possibility that if a tax which will do a great deal of damage is put on, then at some future date, when the damage has already been done, some Chancellor of the Exchequer may come down to the House of Commons and ask us to reverse this decision which today we ought not to be asked to pass.

5.45 p.m.

Sir Patrick Hannon: I am interested in the motor industry, for I am associated with the Daimler company, as I think the Chancellor knows. The right hon. Gentleman's attitude is well nigh scandalous and it would be disastrous to the whole motor industry.
Take the position of the Daimler company at Coventry. We took over from the Government a very large factory, and we spent an enormous amount of money in equipping the factory for the provision of cars for export We have organised and mobilised manpower, and the manpower we have is highly technical with specialised qualifications Our motor cars have gone to many parts of the world and are the shop window of the industry. The reputation of the Daimler abroad is well known, especially in our Dominions and Colonies, and it is an advertising medium for the high class products of this country. The Chancellor has said that he is prepared to modify the Purchase Tax in favour of the companies if it is shown that it is injurious to the production of cars. I accept that with pleasure, but I say that that will be too late because the whole industry will be disorganised. I see on the other side of the Committee the hon. Member for East Coventry (Mr. Grossman), and he knows the conditions of our workpeople in Coventry. If they are scattered over the country as a result of this tax crushing the motor industry hard, it will be difficult to get them together again to reconstruct the output of cars when this Purchase Tax is reduced to 33⅓ per cent.
The motor industry has responded magnificently to the call of the Government for more production, and in our works at Coventry we have the highest class of technician to be found in any part of the world. They are men whose skill and craftsmanship are creditable to the country. If the industry is dislocated and these men are scattered to the four corners of the

land, how are we to get them back again to produce cars when they are needed? I feel strongly about this and I say that the Chancellor, by this act, is undoing much of the good he has done in many respects to help industry to increase production. This will be a great blow at the motor industry, and at the same time will prevent the maintenance of a high level of employment in scores of firms The Daimler company had to increase their price because of increased costs. We have orders from South Africa, Australia and elsewhere for one of our types of car. That car sold at £1,270. After an allowance for the agent and other deductions it works out at £1,016. Some of those cars go to the home market, and how can we sell them in the home market if we have to add 66| per cent. Purchase Tax? We will not be able to compete against American cars even in our own market I put it to the Chancellor that he is spoiling some of the good work he has done in his public financial policy by loading the motor industry with this tax. It will damage our prestige abroad and it will prevent the production of cars at a moment when increased output is most essential in the interests of the nation.

Mr. Frederick Lee: My right hon. Friend the Chancellor was fully justified in bringing back the attention of the Committee to the very different atmosphere today as compared with that which obtained yesterday. I believe that he was quite right when he pointed out that, so far as the motor car industry is concerned, the export drive, with which we are all supposed to associate ourselves, is entirely dependent on a standardised car and not on the luxury cars we have been discussing this afternoon. I heard several hon. Members refer to the injury which will be done to the engineering industry and to the highly skilled men who are engaged either with the Rolls Royce undertaking or some other firm if this tax is imposed. If it is true that there is such a large concentration of skilled men in any of these factories, the Minister of Labour should know about it, and there should be an immediate redistribution. My hon. and learned Friend the Member for Crewe (Mr. Scholefield Allen) has given instances of the super-quality of the Rolls Royce car, but may I remind him that during the war the Rolls Royce Merlin aero engine—which we all


supposed could not be produced by other than skilled labour—was produced with 80 per cent. unskilled labour in the Ford factories with no decrease in quality.

Sir P. Bennett: I do not think that the hon. Gentleman should allow that statement to go out unqualified. Of course, the quantities were enormously increased, but it was only possible to use the 80 per cent. unskilled labour because we had the 20 per cent. skilled men.

Mr. Lee: I could not agree more. In other words, the use of skilled labour in industry today is not in the actual production but in the setting and tool making, as the hon. Gentleman knows quite well. My hon. and learned Friend the Member for Crewe pointed out that there was a large reservoir of skilled labour engaged in manufacturing processes in the Rolls

Royce undertaking itself. This shows that there is far too great a ratio of skilled people in that firm, particularly when we see that with an 80 per cent. dilution we were able to produce super-quality Merlin engines during the war. I believe, therefore, that the Chancellor would be well advised to continue with his ideas in this direction. I was impressed by what was said by the hon. Member for Moseley (Sir P. Hannon) with regard to skilled labour, and I believe that the decision to go in for motor car export may one day be regretted, but unless we press for standardisation we shall see many people walking the streets of Coventry and Birmingham before very long.

Question put, "That those words be there inserted."

The Committee divided: Ayes. 273; Noes, 128.

Division No. 305.]
AYES.
[6.54 p.m


Adams, Richard (Balham)
Crossman, R. H S
Hamilton, Lieut.-Col. R.


Allen, A. C. (Bosworth)
Daggar, G.
Hardy, E. A.


Alpass, J. H.
Daines, P.
Harrison, J


Attewell, H. C
Dalton, Rt. Hon. H.
Holman, P.


Austin, H. Lewis
Davies, Clement (Montgomery)
Holmes, H. E. (Hemsworth)


Awbery, S. S.
Davies, Edward (Burslem)
House, G


Ayles, W. H.
Davies, Ernest (Enfield)
Hoy, J.


Ayrton Gould, Mrs. B
Davies, Harold (Leek)
Hubbard, T.


Balfour, A.
Davies, Hadyn (St. Pancras, S. W)
Hudson, J. H. (Ealing, W.)


Barnes, Rt Hon. A. J
Davies, R. J. (Westhoughton)
Hughes, Hector (Aberdeen, N.)


Barton, C.
Davies, S O. (Merthyr)
Hughes, H. D. (Wolverhampton, W.)


Battley, J. R.
Deer, G.
Hutchinson, H. L. (Rusholme)


Bechervaise, A. E,
Delargy, H. J
Hynd, H. (Hackney, C.)


Belcher, J. W
Diamond, J.
Janner, B


Benson, G.
Dodds, N. N.
Jay, D. P. T.


Bevan, Rt. Hon. A. (Ebbw Vale)
Donovan, T.
Jeger, G (Winchester)


Bing, G. H. C.
Driberg, T. E. N.
Jeger, Dr. S. W (St. Pancras, S.E.)


Binns, J
Dugdale, J (W. Bromwich)
John, W


Bowden, Flg.-Offr. H. W.
Dumpleton, C. W.
Jones, Etwyn (Plaistow)


Bowles, F. G. (Nuneaton)
Edelman, M.
Jones, P. Asterley (Hitchin)


Braddock, Mrs. E. M. (L'pt, Exch'ge)
Evans, E. (Lowestoft)
Kenyon, C.


Braddock, T. (Mitcham)
Evans, John (Ogmore)
Kinghorn, Sqn.-Ldr. E


Bramall, E. A.
Evans, S. N. (Wednesbury)
Kiney, J.


Brook, D. (Halifax)
Fairhurst, F.
Kirby, B. V


Brooks, T. J. (Rothwell)
Farthing, W. J.
Kirkwood, D


Brown, George (Belper)
Fletcher, E. G M. (Islington, E.)
Lang, G.


Brown, T. J. (Ince)
Follick, M.
Lavers, S.


Bruce, Maj. D. W. T.
Foot, M. M.
Lawson, Rt. Hon. J. J.


Buchanan, G.
Forman, J. C.
Lee, F. (Hulme)


Burden, T W.
Foster, W. (Wigan)
Leslie, J. R.


Burke, W. A.
Fraser, T. (Hamilton)
Lever, N. H.


Butler, H. W. (Hackney, S.)
Gallacher, W.
Levy, B. W.


Callaghan, James
George, Lady M. Lloyd (Anglesey)
Lewis, A. W. J. (Upton)


Carmichael, James
Gibbins, J.
Lipton, Lt.-Col. M


Castle, Mrs. B. A.
Gilzean, A
Logan, D. G.


Champion, A J.
Glanviffe, J, E. (Consett)
Longden, F


Chater, D.
Gordon-Walker, P. C
Lyne, A. W


Chetwynd, G. R.
Granville, E. (Eye)
McAdam, W


Cluse, W. S.
Greenwood, A. W. J (Heywood)
McAllister, G.


Cocks, F. S.
Grenfell, D. R.
McEntee, V. La T.


Coldrick, W.
Grey, C. F
MoGhee, H. G.


Collindridge, F,
Grierson, E.
Mack, J. D.


Collins, V. J.
Griffiths, Rt. Hon. J. (Llanelly)
McKay, J. (Wallsend)


Colman, Miss G. M.
Griffiths, W. D. (Moss Side)
Mackay, R. W. G. (Hull, N.W.)


Comyns, Dr. L.
Gruffydd, Prof. W. J.
MoKiniay, A S.


Corbel, Mrs. F. K. (Camb well, N. W.)
Guest, Dr. L. Haden
Maclean, N. (Govan)


Corlelt, Dr. J.
Gunter, R. J.
Mainwaring, W. H.


Corvedale, Viscount
Haire, John E. (Wycombe)
Mattalieu, J. P. W.


Cove, W. G
Hale, Leslie
Mann, Mrs. J.


Crawley, A.
Hall, W. G.
Manning, C. (Camberwell, N.)




Manning, Mrs. L. (Epping)
Rees-Williams, D R
Sylvester, G. O.


Marshall, F. (Brightside)
Reeves, J.
Taylor, H. B. (Mansfield)


Martin, J. H.
Reid, T (Swindon)
Taylor, R. J. (Morpeth)


Mathers, G.
Rhodes, H.
Taylor, Dr. S. (Barnet)


Medland, H M
Richards, R.
Thomas, D. E. (Aberdare)


Mellish, R J
Ridealgh, Mrs. M
Thomas, I. O (Wrekin)


Messer, F
Robens, A.
Thomas, George (Cardiff)


Middleton, Mrs L
Roberts, Emrys (Merioneth)
Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)


Mikardo, Ian
Roberts, Goronwy (Caernarvonshire)
Thorneycroft, Harry (Clayton)


Millington, Wing-Comdr E. R
Roberts, W (Cumberland, N.)
Thurtle, Ernest


Mitchison, G. R
Robertson, J. J. (Berwick)
Tiffany, S.


Monslow, W.
Ross, William (Kilmarnock)
Titterington. M. F.


Moody, A. S.
Royle, C.
Tolley, L.


Morgan. Dr. H B
Scollan, T.
Turner-Samuels, M.


Morley, R.
Scott-Elliot, W.
Ungoed-Thomas, L.


Morris, P (Swansea, W.)
Segal, Dr. S.
Walker, G. H.


Morris, Hopkin (Carmarthen)
Shackleton, E. A. A
Wallace, G. D. (Chislehurst)


Morrison, Rt. Hon H. (Lewisham, E.)
Sharp, Granville
Wallace, H. W. (Walthamstow, E.)


Mort, D. L
Shawcross, Rt Hn Sir H. (St. Helens)
Watkins, T. E.


Moyle, A.
Shurmer, P
Watson, W. M.


Nally, W
Silkin, Rt. Hon. L.
Webb, M. (Bradford, C.)


Naylor, T. E.
Silverman, J (Erdington)
Weitzman. D


Nichol, Mrs. M E (Bradford, N.)
Silverman, S. S. (Nelson)
Wells, P. L. (Faversham)


Noel-Baker, Capt. F. E. (Brentford)
Simmons, C. J.
West, D, G.


Noel-Baker, Rt. Hon P. J. (Derby)
Skeffington, A. M.
White, H. (Derbyshire, N.E)


O'Brien, T.
Skeffington-Lodge, T. C
Whiteley, Rt. Hon. W.


Oldfteld, W. H.
Skinnard, F, W.
Wilkins, W. A.


Orbach, M.
Smith, C. (Colchester)
Willey, F. T. (Sunderland)


Paget, R. T
Smith, H. N (Nottingham, S.)
Willey, 0. G. (Cleveland)


Palmer, A M. F
Smith, S. H. (Hull, S.W.)
Williams, D. J. (Neath)


Paton, J. (Norwich)
Snow, Capt. J. W.
Williams, J. L. (KelvingroveX


Pearson, A.
Solley, L. J.
Willis, E.


Peart, T. F.
Surensen, R. W,
Wills, Mrs. E A


Poole, Major Cecil (Lichfield)
Soskice, Maj. Sir F
Wilmot, Rt. Hon. J


Popplewell, E.
Sparks, J. A.
Wise, Major F. J


Porter E. (Warrington)
Stamford, W
Woods, G. S


Proctor, W. T.
Stephen, C.
Wyatt, W.


Pryde, D. J.
Stewart, Michael (Fulham, E.)
Yates, V. F.


Pursey, Cmdr. H
Strauss, G R (Lambeth, N.)
Zilliacus, K


Randall, H E
Stross, Dr. B



Ranger, J
Stubbs, A. E
TELLERS FOR THE AYES;


Rankin, J.
Summerskill, Dr. Edith
Mr. Joseph Henderson and




Mr. Hannan.




NOES.


Agnew, Cmdr. P. G.
Fletcher, W. (Bury)
Macdonald, Sir P. (I. of Wight)


Amory, D. Heathcoat
Fraser, H. C. P. (Stone)
Mackeson, Brig H. R.


Anderson, Rt. Hon. Sir J. (Scot. Univ.)
Fraser, Sir I. (Lonsdale)
McKie, J. H (Galloway)


Assheton, Rt. Hon. R
Fyfe, Rt. Hon. Sir D. P. M
Maclay, Hon. J S


Astor, Hon. M
Galbraith, Cmdr. T. D
MacLeod, J.


Barlow, Sir J.
Gammans. L. D
Maitland, Comdr. J. W.


Beechman, N A
Glyn, Sir R.
Manningham-Buller, R E


Bennett, Sir P
Gomme-Duncan, Col. A
Marples, A. E.


Birch, Nigel
Gridley, Sir A.
Marshall, D. (Bodmin)


Boothby, R
Grimston, R. V.
Marshall S. H. (Sutton)


Bower, N.
Hannon, Sir P (Moseley)
Mellor, Sir J


Boyd-Carpenter, J A.
Hare, Hon J. H (Woodbridge)
Morris Jones, Sir H


Bracken, Rt. Hon. Brendan
Harris, H Wilson
Morrison, Maj. J. G. (Salisbury)


Braithwaite, Lt.-Comdr J. G
Harvey, Air-Comdre A. V
Morrison, Rt Hon. W S. (Cirencester)


Brown, W J. (Rugby)
Haughton, S. G.
Neven-Spence, Sir B.


Buchan-Hepburn, P. G T
Head, Brig A. H
Noble, Comdr. A. H P


Butcher, H. w.
Headlam, Lieut.-Col. Rt. Hon. Sir C.
Nutting, Anthony


Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)
Hinchingbrooke, Viscount
O'Neill, Rt Hon. Sir H


Challen, C.
Hogg, Hon. Q.
Orr-Ewlng, I. L.


Channon, H
Hollis, M. C
Osborne, C.


Clifton-Browne, Lt.-Col. G
Holmes, Sir J. Stanley (Harwich)
Peake, Rt. Hon. 0


Conant, Maj. R. J. E.
Howard, Hon. A.
Peto, Brig. C. H. M


Crookshank, Capt Rt. Hon. H. F. C.
Hulbert, Wing-Cdr. N, J.
Pickthorn, K.


Crosthwaite-Eyre, Col. 0. E.
Hutchison, Lt.-Cm. Clark (E'b'rgh W)
Ponsonby, Col. C. E


Crowder, Capt. John E
Hutchison, Col. J. R. (Glasgow, C.)
Price-White, Lt.-Col D


Cuthbert, W. N.
Jeffreys, General Sir G.
Raikos, H V.


Davidson, Viscountess
Jennings, R.
Rayner, Brig. R


De la Bere, R
Joynson-Hicks, Hon. L. W
Reid, Rt. Hon J S C (Hillhead)


Oigby, S. W.
Kerr, Sir J. Graham
Ronton, 0.


Dodds-Parker, A. D
Lambert, Hon. G.
Roberts, H. (Handsworth)


Dower, Lt.-Col A V G (Penrith)
Legge-Bourke, Maj. E. A H
Robinson, Wing-Comdr. Roland


Drayson, G B
Lennox-Boyd, A. T.
Ropner, Col. L


Drewe, C.
Lindsay, M (Solihull)
Sanderson, Sir F


Dugdale, Maj Sir T (Richmond)
Linstead, H. N.
Scott, Lord W.


Eccles, D M
Lloyd, Selwyn (Wirral)
Shepherd, W S. (Bucklow)


Eden, Rt. Hon A
Low, Brig. A. R. W.
Smiles, Lt.-Col. Sir W


Elliot Rt Hon. Walter
Lucas-Tooth, Sir H.
Smithers, Sir W


Fleming, Sqn.-Ldr. E L
Lyttelton, Rt Hon. O
Snadden, W. M.







Spearman, A. C. M
Thorneycroft, G. E. P. (Monmouth)
Williams, C. (Torquay)


Stanley, Rt Hon. O
Wakefield, Sir W. W.
Winterton, Rt Hon. Earl


Studholme, H G
Walker-Smith, D.



Sutcliffe, H
Webbe, Sir H. (Abbey)
TELLERS FOR THE NOES:


Taylor, Vice-Adm. E A. {P'dd't'n, S
Wheatley, Colonel M, J
Major Ramsay and


Teeling, William
White, J. B (Canterbury)
Lieut.-Colonel Thorp.


Question put, and agreed to.

Further Amendments made: In page 7, line 15, after "forty-seven," insert:
and (b)in so far as they relate to road vehicles, on the eighteenth day of June, nine teen hundred and forty-seven.

In line 18, leave out "that date," and insert:
the date of the coming into operation thereof in relation to those goods."—[Mr. Dalton.]

Clause, as amended, ordered to stand part of the Bill.

NEW CLAUSE.—(Rate of excise duty on motor cars (other than electrically Propelled.))

(1) The rate of the duty of excise chargeable under Section thirteen of the Finance Act, 1920, in respect of a mechanically propelled vehicle of a description specified in paragraph 6 of the Second Schedule to that Act, being a vehicle registered under the Roads Act, 1920"for the first time on or after the first day of January, nineteen hundred and forty-seven. and not being an electrically propelled vehicle. shall be ten pounds

(2) In accordance with the preceding subsection the said Section thirteen shall have effect as if the following paragraph were substituted for the said paragraph 6. that is to say—

Description of Vehicle Rate of Duty
Rate of Duty


"6. Any vehicles other than those charged with duty under the foregoing provisions of this Schedule—






£
s
d


(a) Electrically propelled vehicles
7
10
0


(b) Other vehicles—





(i) If registered under the Roads Act, 1920, for the first hundred and forty-seven—





Not exceeding 6 horsepower
7
10
0


Exceeding 6 horsepower—





For each unit or part of a unit of horse-power
1
5
0


(ii) If so registered on or after that day
10
0
0

(3) This section shall come into operation on the first day of January, nineteen hundred and forty-eight.—[Mr. Dalton.]

Brought up, and read the First time.

Mr. Dalton: I beg to move, "That the Clause be read a Second time."
This matter will not be contentious to the degree to which the last proposal was It is a suggestion to meet a request that

was made to me, in order—to use the phrase which was introduced by one of my hon. Friends—to divorce design from taxation. The proposed new Clause aims 'at making all new cars pay a flat rate of £10,instead of either the horse-power rate or the cubic-capacity rate. New cars, as defined in the new Clause, are to be taxed as from the commencement of the next licensing year. Cars registered after 1st January, IQ48. will pay on the flat rate of E1o. We have also to deal with the intermediate class of cars, in order to avoid having three separate taxes operating together, which would be the case under the present law if we did not amend it. Those cars would be paying according to the cubic capacity formula adopted last year. We propose that those cars shall also pay £10 a year. That leaves the older cars, registered before 1st January last, to pay at the old horse-power rate. The argument may be employed in this discussion that we should carry back further the date at which the new uniform tax applies. I had better wait to listen to it, before I deal with that matter. The brief intention that we have in mind here is, while sacrificing as little revenue as need be in this Financial Year, to introduce this change. As I explained on the last Amendment, the loss will tend to grow as the years go on and as the proportion of cars registered from the new date rises. As that proportion rises, we shall lose more and more revenue, because the £10 will be less productive than the old rate. That problem lies in the years ahead. The purpose at the moment is to hold this loss of revenue within bounds while fully carrying out the divorce between design and taxation.

Mr. Leslie Hale: On a point of Order. Is there not a misprint of this new Clause upon the Paper, Mr. Beaumont? I have a Paper which I have just obtained from the Vote Office, and a line appears to be omitted from it.

The Deputy-Chairman: A line has been omitted in the printing. After the word "first" in (bi) there should appear the words:
time before the first day of January nineteen.

Mr. Peake: Subject to an Amendment regarding the question of the date as from which the proposed new Clause is to operate, which Amendment we hope we shall be able to discuss a little later, the Clause is acceptable to hon. Members on this side of the Committee.

The Deputy-Chairman: Before the right hon. Gentleman proceeds, I should point out that the Amendment to which he has referred has not been selected.

Mr. Peake: Perhaps I might ask whether it is intended to call any of the Amendments to the proposed new Clause?

The Deputy-Chairman: Yes, one will be called, the first on the Order Paper, in line 3, to leave out from "Act." To "not," in line 5.

Mr. Peake: I have no doubt that we shall be able to make our point upon that Amendment, which goes rather wider than the one standing in the name of my right hon. Friend the Member for West Bristol (Mr. Stanley). I am glad that the hon. Member for Oldham (Mr. Hale) has drawn attention to the fact that the second Subsection of this Clause as it stands on the Order Paper makes nonsense and shows signs of the very hasty work which no doubt has to be done in the right hon. Gentleman's Department at the present time. I hope that a suitable occasion will be taken for correcting the Clause before it finds its way into the Finance Act of this year.

Clause read a Second time.

Mr. Alfred Edwards: I beg to move, as an Amendment to the proposed Clause, in line 3, to leave out from "Act," to "not," in line 5.
It seems to me that the Committee should take the opportunity of looking at this matter again. The Chancellor is removing what must have been one of the most stupid forms of taxation ever known. It was a form of tax which absolutely crippled the designer in this industry, and the step now taken is an important one. I could have wished that the Chancellor had listened a little more carefully to my plea a year earlier, but I could overlook that if he would give some attention to this point. It seems a great pity that the good work achieved in this Clause should be marred by leav-

ing very bad feeling, which there is bound to be, among so many people who at the request of the Government will use their old cars much longer than they would ordinarily do. They will be penalised for using their old cars rather than endeavouring to get new ones.
The Chancellor has frequently said that it he gives up revenue on the one hand he must make it up on the other. If I understand his answer aright, in reply to a Question by the hon. Member for Hornsey (Mr. Gammans) on 24th June, he said he could remove this grievance at the cost of £5,500,000. It is a pity that he should leave this bad feeling among so many people who will be driving their cars as long as possible and who do not understand, as we do, the Chancellor's difficulty, and should mar this very good bit of work by making those people continue to pay heavily, and too heavily compared with people driving new cars. It would be in the Chancellor's interest, and the Committee would feel it worth while, to make some sacrifice to create a much better feeling. Although £5 million is a lot of money, it is comparatively small compared with our budget in these days, and it is worth sacrificing a small amount like this for the sake of the good will the Chancellor would create in the community. I hope he will take a second look at this and see if he cannot abolish the horse-power tax altogether and allow everybody to pay a flat rate. He will find himself very popular if he does so, and in the long run it will not cost him very much.

6.15 p.m.

Mr. Peake: The effect of this Amendment would be to apply the £10 rate of tax on horse-power to all cars irrespective of the date of their registration. The Amendment which you, Mr. Beaumont, have informed me is out of Order, is a similar Amendment but very much more limited in its character in that it would only apply the £10 rate to cars registered on or after 1st January, 1946. I must confess to being a little puzzled that our limited proposal should be held to be out of Order when the far more extensive and far more expensive proposal of the hon. Member for West Middlesbrough (Mr. A. Edwards) has been held to be in Order. I should have liked, with your permission, to address some remarks to the merits of the Amendment


in the name of my right hon. Friend and I should also have liked an opportunity of dividing the Committee, if necessary, upon it.

The Deputy-Chairman: Obviously, that cannot be done. The Amendment in the name of the right hon. Member for West Bristol (Mr. Stanley) has not been selected for Debate. If the right hon. Gentleman would like to make a point he may do so as long as he does not deal with it too lengthily.

Mr. Peake: I must confess to being in a state of complete confusion why my Amendment should be held to be out of Order. I could quite understand my Amendment not being selected, but I cannot understand my Amendment being out of Order when the far more extensive Amendment now before the Committee has been held to be in Order.

The Deputy-Chairman: The Amendment standing in the name of the right hon. Member for West Bristol has not been selected, it being out of Order, because if agreed to it would impose a higher charge on some small vehicles.

Mr. Peake: With all respect, Mr. Beaumont, it certainly would not impose a charge. It would remit an existing charge on all vehicles registered during the calendar year 1946. The Amendment now before the Committee remits a charge on all vehicles quite regardless of their date of registration.

The Deputy-Chairman: I am informed that the Amendment not selected would impose a higher tax on small vehicles. Therefore, it would be out of Order.

Mr. Peake: of course I accept your Ruling, Mr. Beaumont, but I must confess that I have not succeeded with my limited powers in properly apprehending it. However, I will address my remarks to the Amendment now before the Committee. I have considered this matter with my hon. and right hon. Friends and we are not inclined to give our support to a proposal which would involve the Chancellor at this stage in what we consider to be a very substantial and serious loss of revenue. We do, however, think that the date which the Chancellor has chosen in his new Clause, that is to say:
…a vehicle registered…for the first time on or after the first day of January, nineteen hundred and forty-seven…

is not a very happy one. If we accepted the suggestion in the Amendment, a great many cars which had not borne Purchase Tax would in fact secure a reduction in taxation. We think it is right that any concession as regards the horse-power tax should be limited to cars upon which Purchase Tax has been paid. A convenient date for the purpose would have been 1st January, 1946, for the reason that virtually no new cars for private use were registered during the war. By 1st January, 1947, however, considerable numbers of new postwar cars, cars built and registered since the war, were coming on to the roads, and the result of the date which the Chancellor chooses in the Clause will be that, as a matter of pure accident, some cars will be paying a tax of £25 or £30 on their horse-power and other cars of similar construction, also postwar models, will bear tax of £10, and there will be a vast difference in the secondhand values of these two vehicles which, in other respects, are precisely similar. We think he has chosen an unfortunate date, and we wish he could have chosen a date which brought within the scope of this concession all new cars built since the war.

Lieut.-Colonel Lipton: In the first place, I disagree cordially with the suggestion put forward by the right hon. Member for North Leeds (Mr. Peake). While it is true that he has drawn attention to an unfair distinction, there is just as little logic in his selection of 1st January, 1946, as there is in the date selected by my' right hon. Friend the Chancellor of the Exchequer, namely, 1st January, 1947. The purpose I had in mind in putting forward my Amendment, which has not been selected, namely, in line 5, leave out "forty-seven," and insert "forty-one," is to provide that the £10 flat rate for a private car licence should be extended to all cars on which Purchase Tax has been paid. I hope that the Chancellor will accept this suggestion, or give it careful consideration as compromise between what has been asked for by my hon. Friend the Member for East Middlesbrough (Mr. A. Edwards) and what has been suggested from the Front Bench opposite.
The Chancellor's new Clause applies the flat rate to all cars registered for the first time in 1947, and to all cars first registered in 1948 thereafter. No particular


reason seems to have been adduced so far by my right hon. Friend for the selection of the date 1st January, 1947. Once he has admitted the retrospective principle, so to speak, in this regard, there is no reason why he should limit himself, neither is there any particular merit in the date he has chosen. In order to gain some information on the subject, I put a question to my right hon. Friend the Minister of Transport about the number of cars first registered in the years 1941 to 1946. I did so in an endeavour to find out how many cars had been registered in respect of which Purchase Tax had been paid. Purchase Tax came into operation, by Resolution of the House, on 1st January, 1941, and I find that in the period 1941–46, 134,083 cars were registered for the first time. It is true that these unavoidably include a certain number of cars which are not primarily used for private purposes and it may also well be that in the case of cars purchased or supplied to Government Departments, Purchase Tax may not have been paid. Some of these 134,083 cars to which I have referred are not affected by the £10 flat rate proposal, being under 10 horse-power. There are no published figures as before the war to show how many of that size were registered in the years to which I have referred, so it would be impossible for me to put forward any figure of the cost to the Exchequer if the Chancellor were to agree to place all cars in respect of which Purchase Tax had been paid— in other words, all cars registered since 1st January, 1941—on the flat rate of £10 per car.
My right hon. Friend has mentioned on more than one occasion that he does not want to have three types of taxation in operation at the present time. That is a legitimate and very defensible attitude to take up, but in respect of the cars that will continue to pay on the old basis of taxation there will none the less be two categories, namely, those cars which have paid Purchase Tax and those cars which have not. I think he might reasonably be expected to give some consideration to ironing-out that form of discrimination which exists, or will exist, in respect of cars registered before 1st January, 1947.
It seems to me that all these discussions about the proposed flat rate of licence duty have been limited to the motor manufacturers; the representatives of the users of the private car, who are more

directly affected, do not appear to have been consulted at all. As my hon. Friend the Member for East Middlesbrough has rightly pointed out, the owners of cars first registered before the 1st January, 1947, naturally feel that they are being treated unfairly by comparison with the owners of cars first registered after that date. I hope, therefore, that my right hon. Friend will be prepared to cast a favourable eye upon the suggestion I am putting forward, which represents a reasonable compromise between the two views that have been expressed.

Mr. David Eccles: I support what the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) has said, and I think there are some published figures in our Monthly Digest which would help his case. Taking the registrations for cars, 50,000 were registered in the first four months of this year, so all those will be treated retrospectively because the Chancellor has picked upon 1st January, 1947, as a nice convenient date at which to begin. Going back from 1st January this year to October, 1940, when the Purchase Tax, I believe, first came into operation—

Lieut.-Colonel Lipton: 1st January, 1941.

Mr. Eccles: That suits me better and I thank the hon. and gallant Member for correcting me. In 1946, for the whole year, 10,000 were registered and in the five preceding years only 1,500. Therefore, there are 11,500 cars in all over six years since the Purchase Tax was put on which will be excluded by this date. I entirely agree with what my right hon. Friend said, that we on this side of the Committee ought not to support a proposal which exempts all cars, because it costs too much in the present state of the Revenue. On the other hand, the amount which it would cost the Revenue to make this logical division between those which pay the new rate and those which must go on the old rate—the logical division being when Purchase Tax was first imposed— can only be a comparatively small sum of money. I cannot make an accurate estimate, but no doubt the Chancellor will give it. I believe it is true that the average tax paid per car today is about £14. If that is reduced to £10, that represents £4per car, so if there are 11,500 cars to bring in, the Chancellor will lose about £50,000 by making what I believe to be a logical—

Major Cecil Poole: Surely, the hon. Member is losing sight of the fact that second-hand cars also would be brought in?

Mr. Eccles: Perhaps I have not made myself clear. I am only asking the Chancellor to consider bringing in those cars which were registered as new cars since 1st January, 1941, when the Purchase Tax first came in. There seems to be a definite reason for making this distinction, because the buyer of the car has had to pay—

6.30 p.m.

Mr. Dalton: The hon. Member's Amendment proposes to substitute "forty-six for" forty-seven."

Mr. Eccles: That Amendment has not been selected. I have been impressed by arguments in the Committee, and I am inclined to think that there is more sense in the Amendment of the hon. and gallant Member for Brixton than there is in our Amendment. On looking at the figures I think he is right and I hope I shall be excused for departing from our Amendment. Would the Chancellor indicate the actual cost to the revenue if we went back to 1st January, 1941, because if it is not more than £50,000 that seems reasonable? I hope the right hon. Gentleman will see his way to accede to that because there is nothing logical in going back at all, unless we go back the whole way

Sir P. Bennett: I feel in a rather difficult position. I want to agree with everybody. I put my name down to the Amendment which seeks to insert "forty-six" for "forty-seven," because I thought it was all for which we dare ask. Having had very favourable treatment by the Chancellor, I felt entitled, like Oliver Twist, to ask for more. I was impressed by the arguments of the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) and also by the arguments of the hon. Member for East Middlesbrough (Mr. A. Edwards). When I was a small boy taking my first job, they asked me how much money I wanted, and I said, "As much as I can get." I feel very much the same in this case. I would like all these things, and, therefore, I ask the Chancellor why we cannot have them now
When the Chancellor suggested this change, I did not think the ordinary

motorist would worry very much about it. I thought he would say, "The Chancellor has made this new arrangement, and I shall benefit in the future." But, getting about among ordinary motorists who will not benefit, and who cannot buy a motor car for many years, I have not been able, by using all the powers at my disposal, to explain to them why some are to have a much larger tax than others, and I am expecting a great deal of trouble as time goes by. Anything which the Chancellor can do to remove this feeling of hardship would be a good thing. I know that whatever system of taxation we have, someone will feel hardly done by, but in this case there will be a large number of people whose purses are very narrow and who are using old cars. They are going to feel this very much The Chancellor would do a great deal of good by looking at the various suggestions, and in going as far as he can to remove that feeling of hardship which is widespread, and which will go on as the years pass.

Major Poole: There has been a good deal of talk about logic in relation to this Amendment, but to me the Debate seems to have been completely illogical. Even the Chancellor seemed a little illogical when he suggested that the purpose of the reduction was to foster design. Removing the tax from cars registered in 1947 does not help the design of those cars at all, because they are conforming to the old designs. To be logical, the date should be 1st January. 1948, but the trouble would then be that no one would buy any new car over 8 horse-power during the remainder of this year. I cannot see the connection in the argument between reduction of this tax and motor cars in respect of which Purchase Tax has been paid. There is no relation between the two forms of taxation. Many people have paid large sums for derelict old cars, and they are in a worse position because of the countless replacements that are necessary, almost weekly. If we are going to do anything different from that which the Chancellor proposes, the tax ought to apply to all cars, new or secondhand Then the only people who would rejoice would be the secondhand car dealers, and we would further inflate the secondhand car market. There would be much more racketeering than there is now. If there is any reduction in the tax, there should


be some measure of control over secondhand car prices. It is long overdue. Having taken out a new car this year I am satisfied, but if we are going to be logical, and if the purpose of the reduction is to foster design of new cars, 1st January, 1948, is the date which should have appeared in this Amendment.

Mr. Gallacher: On a point of Order. I understand the Amendment is that certain words should be left out. As far as I can understand, no one has discussed that at all. Is it not the case that the whole discussion is out of Order?

The Deputy-Chairman: If it had been out of Order, I should have ruled it out of Order.

Mr. Gallacher: Is anyone discussing whether the words are to be left out, or not? I want an answer, as I might get out of Order later on.

The Deputy-Chairman: The hon. Member is not discussing the Amendment, therefore, he is out of Order.

Viscount Hinchingbrooke: The Committee is in some difficulty, or there might be some misunderstanding, arising out of what the hon. Member for West Fife (Mr. Gallacher) said. The Amendment moved by the hon. Member for East Middlesbrough (Mr. A. Edwards) excludes from taxation all those persons with secondhand cars. In the last 10 minutes, or quarter of an hour, the Committee have rather departed from that, and have concentrated on what date we ought to apply this taxation to new cars. I think the hon. and gallant Member for Lichfield (Major Poole) is quite right, at least he is more right than most. The really logical date would be 18th June, 1947, when the proposals took effect. That is the date which the Chancellor should say that the tax on new cars is to be imposed at a reduced rate. I think the Amendment in the name of my right hon. Friend the Member for North Leeds (Mr. Peake) is the fairest on balance but, unfortunately, we cannot vote on it, as it has not been selected. Why you have ruled it out of Order, Mr. Beaumont, I, like others, cannot understand. The Amendment we are discussing remits taxation on a very large number of cars of all kinds, whereas our Amendment would remit taxation on only a very few cars. Where the point of Order arises—

The Deputy-Chairman: The noble Lord is himself quite out of Order in questioning the Ruling of the Chair.

Viscount Hinchingbrooke: I apologise. The hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) wants us to go back as far as 1941 and to include all new cars which were registered after that date. These cars are getting a little old now, and they have to move down the road side by side with secondhand cars which have been in garages for a considerable time during the war. There might be a lot of feeling in the country if at one house there was a car which was registered for the first time in 1941, upon which reduced taxation was now being paid, and at a house nearby there was a secondhand car, which had been stored during the war. Its owner might have been away fighting, and he would resent the man who registered his car in 1941, when he was away on war service, being charged at the reduced rate of tax which would apply if the hon. and gallant Member's Amendment was adopted. These considerations should be borne in mind by the Chancellor in deciding what to do. By far the best Amendment is the one in the name of my right hon. Friend the Member for North Leeds, and I hope that the Chancellor will give it further consideration, and see whether, on balance, that is not the fairest date, taking all things into account.

Mr. Dalton: The Amendment on the Order Paper seeks to give this reduced rate of duty to all cars. I am glad to know that I have the support of the right hon. Gentleman opposite in resisting that, as resist it I shall. It would cost £5½million. I cannot afford that money, and if I could I would find many better ways of relieving taxation by £5½ million than by reducing the annual licence fees on motor cars. That would not be by any means the best way of giving relief. Therefore, I must resist that proposal and it is on that. in the light of the Ruling which has been given from the Chair, that a vote will take place, if there is a vote. Other suggestions have been made in the Debate. I have been asked for the costs of the various proposals. I have here the cost of the Amendment in the name of the right hon. Member for West Bristol (Mr. Stanley), which would throw the duty


back one year, and would admit 1946 cars to the lesser rate. The cost of that would be £400,000 in 1948, diminishing as the years go by.
I was asked what would be the additional charge of carrying the date back to 1941. The cost would be slightly, but only slightly, greater, for the obvious reason that between 1941 and 1946 relatively few cars were registered. The cost of that would be just over £500,000, as against £400,000 for the other proposal. I cannot give any undertaking this year to move at all from the position which I have adopted in this matter. It is remarkable how, when one comes forth and meets a widespread desire, one is met with happy rejoinders, but on further reflection someone thinks up some further movement which should be made in the same direction, as Oliver Twist used to do, in the words of the hon. Member for Edgbaston (Sir P. Bennett). I must resist Oliver Twist here. I think I have acted pretty well towards the motor industry so far. I must ask to be excused from anything further this year.
I have been asked why not take 1st January, 1948, as the date? The reason is that my proposal does not pick up at the lower end only the new cars, but all the cars which would, if I had not made the change this year, have been paying on the cubic capacity scale. I have explained once that I have thought it desirable, in the general tidying up of this matter. to have only two rates of taxation, not three, running. That is the reason it was necessary to go back to 1st January, 1947, which was the date, under the provisions made in the last Finance Act, upon which we introduced the cubic capacity rate for cars registered thereafter, in substitution for the old horsepower tax. That is an administrative reason. I think it would be a great nuisance to have these three rates of tax in operation together.
6.45 p.m.
It has been suggested that there may be strong feeling in the country about this. I do not believe that for a moment, nor do I believe that the hon. Member for Edgbaston is as incapable as he thought of explaining the matter. We in this Committee have clearly understood it, and I am sure that every intelligent elector in Edgbaston and elsewhere will readily

understand the point, which is that the purpose of this change in taxation is not primarily to confer benefits upon any particular car owners; the purpose is to divorce design from taxation and thereby help the industry towards standardisation of models, and to help it to make its contribution to our exports. That is the only reason for doing it. Any member who is in difficulty in facing the owners of old cars is perfectly entitled to say, as I say now, and even if I did not do so he could guess it, that this will be a very transient form of taxation. As the years go on it will amount to less and less. Therefore, though the cost will at first be £5½ million, it will be less in the next year, and it is a pretty safe bet that at some date in the not far distant future the Amendment which has been put down by my hon. Friend will be adopted.
I am making no promise—it would be wrong to do so—for next year. That proposal would not rank very high in the scale of desirable things compared with many other things. When the amount has shrunk a little over a few years it will be an obvious point on which pressure might be brought to bear, and which eventually, when it becomes sufficiently cheap to meet, might be met. I am much encouraged by the promise of the support of the right hon. Gentleman opposite in resisting the Amendment, if there is any need for that support.

Mr. A. Edwards: I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn

Clause added to the Bill.

NEW CLAUSE—(Imported Films.)

(1) The powers of the Treasury, by virtue of paragraph 12 of the Third Schedule to the Finance Act, 1939, by order to vary certain provisions of that Schedule (which relates to the customs duties on imported cinematograph film) shall, in relation to exposed cinematograph film, include power to alter or add to Section ten of the Finance Act, 1935 (which relates to the valuation for duty of imported goods), as if that Section were among the provisions mentioned in sub-paragraph (2) of the said paragraph 12.

(2) Without prejudice to the generality of the foregoing subsection, an order made by virtue thereof may in particular provide—

(a) that for the purpose of computing the price which any imported film would fetch on a sale in the open market there shall be made (in addition to the assumptions required to be made by the said Section ten) assumptions with respect to—



(i) the inclusion in the sale of exclusive rights of reproduction and exhibition, and. the accrual to the buyer of the gross proceeds of any resale or letting of the film or any reproduction thereof for exhibition;
(ii) the proportion of the said gross proceeds with which the buyer will be content in respect of all or any of his costs, charges and expenses and of his profit;
(iii) the exclusion of the seller and other persons from any interest, direct or indirect, in the subsequent reproduction or exhibition of the film;
(b)that the value of any imported film shall, in such cases as may be provided by the order, be determined by reference to a supposed sale not of that film but of any version prepared or to be prepared for exhibition wholly or partly from that film or a duplicate thereof.

(3) Any order of the Treasury made by virtue of the said paragraph 12 may also contain incidental or supplementary provisions for the purpose of securing the collection and recovery of the customs duty on exposed cinematograph film, including provisions—

(a) that an application for the registration of a film under Part III of the Cinematograph Films Act, 1938, shall not be entertained unless accompanied by such evidence as the order may require for the purpose aforesaid;
(b) that where, with intent to evade the payment of customs duty on exposed cinematograph film, any film not registered under the said Part III is delivered to an exhibitor or exhibited in contravention of Section twenty-two of that Act, any of the enactments relating to customs shall apply with such adaptations as may be provided by the order.

(4) In this Section the expressions 'exposed cinematograph film' and 'duplicate' have the same meanings as in the Third Schedule to the Finance Act, 1939.— [Mr. Dalton.]

Brought up, and read the First time.

Mr. Dalton: I beg to move, "That the Clause be read a Second time."
This also is a matter which has been ventilated in the House previously. I need not speak at length on it, but I will listen with interest to the points which are made, and, if need be, add a word later. The broad purpose of the Clause is to enable us—and I choose my words with care so that they will not be misunderstood by anyone—if it should seem desirable to do so at a later date, to impose this new duty upon imported films. We have no power now to impose a duty of this kind. If we should desire to introduce it later, we must get power to do it now. This is an enabling provision. I make no proposal for the imposition of such a duty now, but I desire to obtain from the Committee the authority to do so later by order, if it

should seem desirable. If we did it, the purpose of it would be to make a further economy in foreign exchange. That is its purpose. The form of the duty is not, in its substance, in any way different from the form of a vast number of other duties. It is to levy an ad valoremduty upon the value of the object taxed. That is the subject and purpose of the Clause.
It is necessary to define how this valuation shall be carried out and we must recall, of course, that it is not the usual practice when a film is imported into this country for it to be sold outright by the importer to some other person. If that were the usual practice, everything would be quite easy. There would then be a valuation based upon the price at which the film changed hands. There may be some cases in which that might happen. It may be that the Rank organisation, for example, may desire to purchase outright certain films manufactured outside this country. If so, the thing is very simple from a fiscal point of view. If we decide to operate this, we shall put a levy at the rate prescribed upon the value as revealed by the sale.
But that is not the normal proceeding and, in order to determine what is the value on which the levy should be charged, we must endeavour to arrive at i4. from the earnings of the film. These only gradually become known. Therefore, we must have, as it were, a trial shot, a ranging shot, at the earnings. An effort will be made, and no doubt the Customs will be able to do it with reason able accuracy. A shot will be made, in the first instance, at what the earnings seem likely to be as an indication of the value of the film. In the first instance, the duty will be levied on the basis of this trial shot and later on, if it should prove that the shot has gone wide in either direction, an adjustment will be made either by repayment by or to the Customs, as the case may be.
I think this is an ingenious way of doing it. I am much obliged to the ingenious people who thought of it. It did, for a little while, baffle us, but I think now that an ingenious method has been devised. I can think of no more effective method. If the purpose is accepted, namely, that we should have it in our power to reduce the flow of foreign exchange in respect of imported films—and that has often been put to me


as a thing that at least we ought to have the power to do, and many people have gone further and said we ought to do it, whilst some have said that we ought to have done it some time ago—these people ought now to give their general support to this proposal. I will not say any more at this stage, but I will be glad to reply to any points that may be raised.

Lieut.-Commander Gurney Braithwaite: I do not think it will be denied in any part of the Committee that some machinery of this sort should be at the disposal of the Chancellor in our present predicament. "Food before fags" and now, "Food before films."

Mr. Dalton: "Food before flicks."

Lieut.- Commander Braithwaite: Exactly—with some doubt as to just how long the food will be forthcoming in its present volume. All these things have been brought home to us very sharply. It was only yesterday that my right hon. Friend the Member for Warwick and Leamington (Mr. Eden) pointed out that in the last half of last year our expenditure on machinery was 5 per cent., on films it was 7 per cent., and on tobacco it was 32 per cent. Therefore, no one will be in a mood to object to some apparatus of this sort being at the disposal of the Chancellor of the Exchequer. What I think should be said is that perhaps ingenuity may have been carried a little too far. In this new Clause there are certain rather new departures from our normal procedure.
The right hon. Gentleman indicated one of them when he referred to the shot in the dark in the first place, with a calculation which will follow a little later. This, of course, is an entirely new principle. This also imposes what is in effect a tax on the profits made on the showing or exhibition of the films in various parts of the country. One does wonder—and I think this should be said at this stage —whether the right hon. Gentleman will succeed by this method of control in preventing the tax from being passed on to the renter and the exhibitor. It seems to me that some of the smaller independent cinemas outside the great combines and groups with which we are all familiar might find that the tax descends upon them with harshness. Then, of course, there is the one old bogy of ours which has cropped up so very often

during this Parliament. However desirable the objective may be, I think it must be stressed upon the right hon. Gentleman that again we are giving away certain of our powers. We are going to allow the Chancellor a very wide range of activity by way of regulation—

Mr. Glenvil Hall: Affirmative Resolution.

Lieut.-Commander Braithwaite: Yes, but we all know the circumstances in which affirmative Resolutions are taken. Generally it is at 1 o'clock in the morning with the Closure applied after a Debate of three-quarters of an hour or an hour. That safeguard is not quite the strength and stay that it used to be in the days of Tory Government when there were affirmative resolutions. These things are now taken in the night watches with a tired and generally hilarious gathering. The Financial Secretary has had to cope with some of the hilarity frequently. He will realise the force of what I am saying. I must also mention that no rate of duty is here specified, so that really we are giving the right hon. Gentleman a good deal. Even those who have faith, and they are a diminishing number both in this Committee and outside, must look at their responsibilities as private Members before they give too much away. While it is necessary to curb the import of American films—and that is something which I think will be supported by my hon. Friends on this side of the Committee; certainly, I support it—I think we ought to proclaim some disquiet at the method which is being adopted to do it.

Mrs. Leah Manning: I rise merely to ask for some little explanation. Personally, I welcome the steps that are being taken in the new Clause, not least because I think it will help eventually not only to save dollars, but to get the cinema trade in this country to put its house in order. What I wish to know is the relationship of non-discrimination in this matter. Are we taking powers in the Regulations to tax films from all countries abroad? I should regret that very much. While I would keep out every American film—I do not like spending dollars on them because they are mostly bad—I should very much regret having to exclude in any way, or even make it difficult to bring here, every


French film that is made. They are all charming and delightful, and I would be sorry if it would have that effect.

Mr. Dalton: indicated assent.

Mrs. Manning: Indeed, the places where one can buy films cheaply are the places where good films are made. I regret that the Chancellor has indicated that my fears are well founded.

7.0 p.m.

Mr. Gallacher: Yesterday's discussion made it very clear to everyone in the House, and I hope in the country, that what we were suffering from is the stranglehold of the American dollar. That is correct. [Interruption.]Hon. Members should read the Debate yesterday and see what the Chancellor said. Anything the Chancellor can do to loosen that stranglehold will be work well done and will help this country to recover, because it will be impossible for this country to make a recovery while we are dependent upon or tied to the dollar. So I am with the Chancellor in any cuts he makes. It will save him from having to chase around the world for dollars. Two men may stand together: one may look to the West, and see that all is dark and gloomy; the other look to the East, and see blue skies and sunshine. That is quite a common experience. We could go now to the terrace and look one way and find blue skies, and look another way and find dark clouds.

The Deputy-Chairman: I am not quite clear whether the hon. Gentleman is describing a new film or referring to the new Clause.

Mr. Gallacher: I will get to the Clause. Yesterday the deputy Leader of the Opposition said that he was very concerned about the discrepancy of two voices last week. The Chancellor was depressing when he was looking to the West and the dollar situation, but, the next day, the Food Minister was looking to the East and new trade agreements and we had a speech of blue skies and sunshine. The dollar is the factor that is condemning this country to hardship and austerity, and not until the Chancellor gets us out of the clutch of the dollar will we go ahead. So, accordingly, I support the Chancellor in any cuts he may have to make, and I say to the right hon. Gentleman that the people of this country—if he has to make cuts, however

regrettable from certain points of view, they may be—will face them with the same spirit as they faced many other hardships. I am quite certain the people of this country are prepared, if it is necessary, and the Chancellor considers it desirable, to face any cuts he may make, and to tighten their belts if need be. They will echo the desire of the Chancellor for: "Food before Fags" and "Grub before Grable."

Mr. Benn Levy: As the Chancellor of the Exchequer has said, there are two issues involved here. One is the question whether there should be an import duty on films and the other is the form which that duty should take. On the second question, I have some reservations. On the first question, I am wholeheartedly behind the Chancellor. It seems to me of first importance that an import duty should be levied very early. Indeed I am only sorry that there have been, in the presentation of this proposal, so many qualifying "ifs," and I hope that, in fact, the Chancellor, although this new Clause is only a permissive one, will take an early opportunity to implement it. The Chancellor, I understand, has also had the unanimous endorsement of the workers on the production side of the industry, through their joint organisation—the Film Industry Employees Council—which has passed a resolution to that effect. That is not altogether surprising, because, quite recently, they issued a memorandum in which they called for precisely this proposal. They said:
If it is practicable, we would propose tax being made on all box office takings on all foreign films.
I am a little puzzled, therefore, at the attitude of my hon. Friend the Member for West Nottingham (Mr. O'Brien) who, apparently, opposes this import duty, or so committed himself during the course of a broadcast. I am all the more puzzled because the union of which he is an official is also a signatory to this document, and made no reservation. I have read the report of his broadcast speech, which prompted me to the reflection that, although the hands were the hands of N.A.T.K.E., the voice was the voice of Mr. Rank.
As I understand it, his three arguments are these. He points out that the present output of British films accounts for 20 per cent. of existing screen time, and he holds


that it would be impossible to extend this percentage within five or even 10 years. That seems to me to be unreasonably defeatist. I know what the restricting factors are. Studio space is foremost: and, in a letter to "The Times" the other day, Lord Grantley pointed out that the maximum that the studios could turn out was 68 British films a year. Nevertheless British screen time could be expanded, for example, by the re-issue of British films, and not necessarily of very old British films, films no earlier than those made four years ago. Studio space could also be used more economically. Moreover, it is possible for extensions to be made; at present, there are extensions to stages being made and building work being carried on. It might be a national economy for this to continue, and further extensions be made within reason. I say that with some reluctance, and certainly no building project of that kind should take place without careful vetting. For instance, it should not be carried on exclusively at the expense of the local building resources. There is no reason why the immediate locality should bear the whole burden of such building. Also there should be much stricter overseeing of the temperamental tendency to extravagance to which film companies are addicted. If they want to build a new wash house, the only standard they know for a wash house—or can remember—is the standard of the Savoy.

Mr. Stanley: On a point of Order, Mr. Beaumont. For our own guidance, may we know whether we shall be allowed to discuss the sanitary ideas of film company directors, which would seem a little remote from this new Clause?

The Deputy-Chairman: Owing to my being otherwise occupied, I was not listening with very close attention to what the hon. Member was saying. We must not, however, discuss irrelevant matters.

Mr. Levy: Surely, the provision of studio space is relevant to the question of expanding the output of British films. The second argument advanced by my hon. Friend is that any cuts in programmes such as this proposal might well result in, would mean that cinemas would actually have to close down. I really cannot accept that argument. What it means if it means anything at all, is that if a new

tax on imported films reduced the number of films available, and, as a result, the exhibitors had to revert to the old practice of single-feature programmes, then, according to my hon. Friend, the public would be so distressed that they would either strike or sulk, and stay away altogether if they could not see two films in one programme. I cannot accept that argument for one moment. There is no reason why single-feature programmes— if they were universally and uniformly accepted in view of any stringent measure which the Chancellor may have in mind— should harm the cinema business in any way.
Apropos of that, the extraordinary auxiliary argument was advanced in the course of this broadcast that there would be less taxation for the Chancellor. I suggest to my right hon. Friend that, in point of fact, there might be more, not less, Entertainment Duty available because a single-feature programme means that it could be shown to four of five audiences a day instead of, perhaps, to only two or three. It would be profitable from the point of view of the exhibitors, the industry, and my right hon. Friend the Chancellor of the Exchequer The third point—and this is really the heart and core of the argument put forward by my hon. Friend—is this I will quote him verbatim:
If we cut American pictures we would embarrass Mr. Rank just when he hoped to arrange for 20 million dollars' worth of British pictures to be exported to America.
Mr. Rank has been hoping for a very long time, and has been putting up a very brave fight. He has been wrestling with the American markets, but there is very little concrete evidence that he is really having any substantial success. Whenever a measure of the sort which my right hon. Friend is now putting forward comes on the tapis,there is always immediately talk of new deals, and we are asked, "Please do not rock the boat; let the negotiations proceed." I take the view that it is now time that we had the actual facts and figures stated fully in public. Let us have no more of these vague suggestions of what may be done, of what it is hoped to do. There is talk of a new deal with American organisations amounting to 12 million dollars. It is not said, however, whether that is a guaranteed 12 million dollars; it is not said whether it is a gross or a net 12 million dollars. What we


really want to know is the net figure, and whether it is guaranteed. We have not got that information, and we never get it. I suggest to my right hon. Friend the Chancellor that the time has now come when we should strike, in public, a balance sheet in dollars for the whole film industry and its ramifications.
Therefore, I should like to ask some specific questions which are really relevant to this discussion. The first is what have British films grossed in dollars in the last two years: secondly, what have they netted in dollars after all promotion costs have been deducted and what amount of dollars have therefore been available for bringing back into this country. Thirdly, what, if anything, has been spent in dollars on the acquisition of theatres in America or in Canada by the Rank organisation, or any other organisation? Might I have my right hon. Friend's attention on this point, as it is a specific question which I would like to put to him?

The Deputy-Chairman: I have allowed the hon. Gentleman a good deal of latitude, but I think that he has now gone too wide of the subject under discussion.

7.15 p.m.

Mr. Levy: I am trying to argue the desirability or not of an import tax and whether or not it is true that without such a tax there is a reasonable chance of the industry in its present condition succeeding, as it claims, in getting dollars from America. I think that that is really relevant to the discussion, because, as far as I can see, that is the only argument against an import tax.
What I would like to ask my right hon. Friend, if I may, is whether it is true that theatres have been bought, acquired or built at the expense of dollars by any British film company and, if so, how many dollars have been involved? Fourthly, I would like to ask what dollars, if any, such theatres are bringing into this country in the ordinary way of business? I also understand that a general allowance of dollars is made to the British industry. May we be told what the annual amount of that allowance is, and for what purposes it is expended? Considerable expenditure has been made and continued to be made on the importation of directors, actors and technicians. I would like to know what is the sum involved. It should, of course, be offset by equivalent figures for the export of our own tech-

nicians to America. What is the balance between those two?
Finally, what do all these factors amount to in dollars? Is the balance very heavily against us? If so, how much is it against us and should not that sum be added to the £17 million of dollars which we lose to America every year? When we have these figures we can then examine fairly and reasonably the claim of the Rank and other organisations to be allowed to paddle their own canoe on the dollar question. Moreover, even if Mr. Rank's hopes were justified, and even if he should succeed in America, I think we should still hold to our course because the only argument against doing so is the fear of retaliation. That is not a fear which we need entertain because what it means is that we are afraid that, if we reduce our £17 million worth of dollars for American films, they will retaliate by reducing the odd half million pounds' worth that go back the other way. Is that a threat we need worry about? If it is a question of competition in tariffs or quotas or duties between ourselves and America in regard to films, that is one competition which we could go into quite fearlessly because they vitally depend on our market, whereas we would merely like to get into theirs. Theirs is extra to us, but ours is their life-blood. We have the whip hand in that connection, and there is nothing of which to be afraid.
As to the form of the tax, for my own part, I prefer what is called a footage tax—that is to say, a flat tax of so much a foot on imported films. The objection to an ad valoremtax is that it is extremely difficult to administer. It is inevitably difficult to administer. The Chancellor has not yet told us how it is proposed to make the initial assessments. Will a body be appointed by the Customs and Excise to sit on each of 300 odd films which come into the country? I cannot think that that is practicable. At what point will it be decided that there is no more money to be derived from a film, that its life is exhausted? Surely that is a very difficult thing to assess. Secondly —this point has been made by my hon. Friend the Member for West Nottingham —what arrangements can be made to ensure that the tax is not passed on to the consumer? I understand that the Board of Trade is satisfied that that point can be looked after, but I think the Committee should be told about it.
My main objection to the proposed form of tax, however, is that it fulfils only one function; that is to say, it collects dollars. That is very important, but it is not the only thing that a tax could do. The advantage of the footage tax, as against this, is that it gets the dollars just the same. It is much simpler to administer. It keeps cheaper and inferior films out of the country, because obviously, if one has to pay £60,000 or £70,000 flat on any film, regardless of cost, one will not undertake that additional expenditure if the film costs only that amount. On the other hand if the film costs £500,000, the additional £60,000 or £70,000 will not be a deterrent.
The general standard of imported films, therefore, will be improved by a footage tax. Also, it promotes the export of British films to foreign countries, because the proposal is that it should be linked with a rebate, so that an exporter who has to pay his £10, or whatever it may be, a foot tax on exporting into Great Britain will get a rebate in respect of any films which he imports. The net result would be a considerable help to Mr. Rank and others in their negotiations with the Americans. Also it would not keep out other foreign films, because apart from the Americans, most countries import more British films than they export into Britain; so that they would not be cut out, whereas the present tax—an ad valoremtax—might have the great disadvantage that we would be cut off from all foreign films except American films, which is not a desirable state of affairs. The Chancellor has told us that the Clause is permissive and, that being so, I hope that the alternative proposal for a footage tax will be sympathetically considered.

Mr. Walter Fletcher: One thing is clear from the speech of the hon. Member for Eton and Slough (Mr. Levy), and that is how pleased he must be that there is no tax on shadow boxing, because that is what he has been indulging in steadily for the last half an hour. He has been attacking a speech which has not been made in Parliament at all by the hon. Member for West Nottingham (Mr. O'Brien). He has not spoken at all today and, therefore, this superstructure based on a speech which has not been made here cannot have quite the value

as a contribution to this Debate that it might have. My other point arising from the hon. Member's speech is this. I was brought up on a poem, one couplet of which was:
And even the ranks of Tuscany Could scarce forebear to cheer.
The "Ranks" of Odeon are not likely to cheer the speech which we have just heard. The Chancellor was reproaching us, on another Clause, on the basis that when he gave us an inch we always asked for an "ell" of a lot. He is asking us for the widest possible powers to adminster this tax. Some years ago I was in the cinema owning industry myself —not on the high level on which hon. Members opposite are, in big groups; not the super cinemas, but just what are technically known as "flea pits," which is the technical trade term for the cinema which is not gilt all over and with a magnificent foyer. When I was an owner, before my chain of cinemas was absorbed, like so many other things are, by the Coop, I discovered that when any form of taxation is brought in to the cinemas, it is invariably the small cinema and not the big group that suffers. I have the greatest fear that in giving the Chancellor of the Exchequer these very wide powers— whether one calls them permissive or any other name one likes—the eventual result must inevitably be to harm the small independent cinema which is an integral part of the life of a small town or village. A great deal of harm is done by the mass-produced super cinemas which do not fit into the landscape or the ideas of the small town or village. Any form of taxation which will tend to punish the small cinema, and encourage monopolists, who are the natural friends of the Chancellor and of this Government, will undoubtedly do something extremely harmful.
It was delightful to hear the hon. Member for Eton and- Sough, who is one of the ruling protagonists of the live form of entertainment, in the dirge that he was singing on the "Corporation of canned culture." One thing is certain, that if we continue this practice of allowing the Chancellor as free a hand as possible in the administration of the tax, whether it be good, bad or indifferent, we will find that its incidence will be harmful to exactly that class which we ought to seek to protect.

Mr. O'Brien: My right hon. Friend the Chancellor of the Exchequer last week gave an assurance that before he exercises the powers which he seeks to obtain, he would not only consult me as a Member of Parliament, but he would also consult with the interests of the industry. That assurance has robbed me of much of the criticism which otherwise I would have levelled at the proposal. I do not know where my hon. Friend the Member for Eton and Slough (Mr. Levy) found that I had opposed the proposal. I opposed the timing of it, and the way in which it has been done, but in Parliament I did not oppose the issue and the principle at all, and I do not think the Committee will agree that I am called upon to justify an opinion on this matter which I have expressed in a broadcast speech. Surely, on such an occasion I can state what opinions I like, so long as I am within the law. If I express them I ought not to be the subject of criticism such as my hon. Friend has levelled.

Mr. Levy: I am sorry to interrupt my hon. Friend, but I did not appreciate from what he said on the B.B.C. that he would not consider himself responsible for it. Therefore, in discussing his opinion, it seemed to me perfectly clear that what he said on the B.B.C. represented his opinion.

7.30 p.m.

Mr. O'Brien: Let us get down to the plain facts. Imposition of a tax of this character would have an effect on the future of the British film industry as a whole. British films as they are made now—the producing side of the industry— cannot possibly expand or even be maintained at the present rate of expansion without a considerable access to the American market. That is a fact which anyone who knows anything at all about the film industry of this country could not possibly contradict. There are sections in the film production side who would, no doubt, profit considerably by the Chancellor's carrying out the proposals that he wants. There are certain interests— important, and small, probably—that could get considerable advantage out of this proposal. But I am not taking the view of any one particular section. I am looking at the industry as a whole.
If we want to develop the British film industry, if we want to have our pictures

on the screens of the world, we must not adopt this method. We cannot do it by this method. The approach is psychologically bad. I wish to concentrate on that point. Mr. Rank is quite capable, with his vast organisation, of looking after himself; but it is precisely to prevent Mr. Rank becoming a private monopolist in this country that I and many of my colleagues are opposing the way in which this is being done. Where are the distributors to get the films from? The only producer to be producing films on any large scale will be the Rank organisation, and we shall put that organisation into a position in which it will become almost a monopoly. Mr. Rank has been attacked from time to time—and my hon. Friend the Member for Slough has taken part in the criticisms—for being a private monopolist. This is going to make him completely a private monopolist, not only dominating his own cinemas, but having a far-reaching domination of the independent distributors whom the hon. Gentleman the Member for Bury (Mr. W. Fletcher) mentioned just now.
I am not going to develop the whole thing fully, but I do beg of the Chancellor, when he deals with this matter later on, as he will, to have regard to the position in the United States. We can gibe at American films, but when I was in the States a few weeks ago I met Mr. Herbert Wilcox. He is an example of a British independent producer away from the Rank organisation, away from all the big money in the film industry; and he is doing, and has been doing, a good job of work for this country in producing and selling British pictures. His last picture, made with his wife—Anna Neagle—starring in it, has gone to the United States. He went round the big film offices trying to sell that picture to America, trying to bring dollars back to this country. I do not know what has happened, but I think he has had a certain degree of success. Just imagine the position of Mr. Wilcox or anybody like him, in going round these commercial film offices—meeting the big shots of the American film industry, trying to get his picture shown on the screens of America, and trying to bring dollars back to this country—in that atmosphere, that bitterness, that has been created by the timing of the Chancellor's proposal. We can take another example, that of Sir Alexander Korda, who has just come back. No


doubt he has informed the Treasury of the arrangements or deal he has made in America. That was made, of course, before these proposals were known. Whatever may be the success of Mr. Rank in getting his pictures over there remains to be seen, but, on the whole, we cannot expect our pictures to go over into America to earn dollars for this country unless the feeling that we are trying to do something wrong is removed.
Everyone sympathises with the Chancellor's difficulties about dollars. But let us try to approach the problem in the interests of the British film industry itself, and do not let us try to solve one problem by creating another and more difficult one. I have already said that the future of the film industry of this country is involved in this matter. Production is involved also in the success we have in getting our pictures on American screens. We do not want any threat of retaliation. We do not want anything like that. Perhaps there will be no retaliation, but we should not put ourselves in the position of asking for it, and making things more difficult for our industry.

Mr. Levy: We need not fear it.

Mr. O'Brien: I would not say we need fear it. I do not know what the American film industry leaders will do if this proposal is put into operation. I do not know whether they will try retaliatory measures, or try to keep our films out of America. But this is not a good atmosphere; not a good background. We hear a good deal of talk about competition between different countries. This is not a satisfactory background at this very moment when we are doing everything possible in the interests of the British film industry, and when we are trying to get our commodities over there, and trying to bring money that we want over here.

Mr. Levy: We have been trying for years.

Mr. O'Brien: Yes, we have been trying for years. We ask the Chancellor for certain information about dollars. The Chancellor will give that information if he wants to give it. But when we are breaking into a country, when we are trying to open up a new market for films, especially in the United States, we must understand that we have to create a considerable organisation, a distributing

organisation, a sales organisation there exactly as the Americans have done over here. The only organisation in this country that could make the experiment and that would have the capital available would be the Rank organisation. I do not know of any independent producer who could possibly afford to set up a vast distributing organisation in the United States. My hon. Friend should remember that dollars earned by British films in the United States have to pay for the creation of this vast organisation.

The Temporary Chairman (Sir Robert Young): I am sorry to interrupt the hon. Gentleman, but he may not discuss the details of the question of the export of films on this new Clause. That is not under discussion now.

Mr. O'Brien: Thank you, Sir. I was making a comment on a remark which my hon. Friend the Member for Eton and Slough made in his speech. However, it takes a good deal of money to establish a distributing organisation in any country, and we must not overlook the fact that that is paid for by the earnings of British pictures in that country. With regard to the effect of this proposal on labour, on the workers of the industry, I do ask the Chancellor to have regard to the fact that wage conditions, wage and working conditions, particularly of the cinema workers, may be adversely affected. It will certainly make the negotiating task of the union more difficult. Wages and working conditions in cinemas can be improved, and ought to be improved, in the ordinary way of negotiation; but if the exhibitors of this country should be confronted with serious difficulties arising from this proposal, that will be bound to affect the particular standards of livelihood of those who are in this business. I do ask the Chancellor seriously to take that fact into consideration.
As to the production side. Obviously, if our films cannot get out of this country the production side will be affected. We cannot expand our studios. It will be five or ten years before we can treble, or even double, the present studio space. While priority must, of necessity, be given to housing and industry it will not be possible for us to make in Britain sufficient films to supply all the cinemas, even with one feature programmes; that cannot be sustained at the present rate of output. No doubt when the Chancellor


replies he will be able to give further assurances on the lines asked for, and will say that he will try to meet all the interests jointly—both the labour and the proprietorial sides —and no doubt he will explain to us more fully what can be done. If that is not possible, I hope he will implement the assurances he gave last week. In the interests of the British film industry as a whole—the production side, the rental side and the exhibiting side—I ask that nothing shall be done which will damage or prejudice its development in this country and abroad.

Mr. Edgar Granville: The hon. Member for West Nottingham (Mr. O'Brien) and the hon. Member for Eton and Slough (Mr. Levy) both speak with considerable knowledge and experience of the films business, and, therefore, we listen to what they have to say with a great deal of interest. No doubt they will forgive me if I do not intervene in the difference of opinion between hon. Members opposite about what they wish to do with Mr. Rank. It is always extremely difficult for this Committee to have a Debate on films without Mr. Rank's name cropping up a good deal. I have no association with Mr. Rank in the film business, although I have been connected with the film industry for 14 or 15 years. It is a little early to say whether the Rank organisation will succeed or not in the great attempt it is undoubtedly making to secure in the United States of America a market for British films. As has been said, a great deal of spade work has been done; a large number of dollars have been spent in printing, promotion expenses, and so on. But whether we should now draw the line, add up the dollars, and say whether they have succeeded or not, quite frankly, I do not know. The Board of Trade must know more about this, and I have no doubt that sooner or later the day will come when the Board of Trade must take a decision. If the Rank organisation's experiment to obtain dollars for British films is a success, then this new Clause will not be necessary, and the Chancellor will not have to impose these restrictions.

Mr. Levy: Surely, it is not very good business to put down £7 million in order to get back £4 million?

Mr. Granville: The hon. Member appreciates quite well what the hon. Member for West Nottingham was referring to. He knows the fundamentals of film production, and that in the very earliest days the Ostrer brothers made the same experiment—I acknowledge that —that the Rank organisation is making today, and they failed, in costs and everything else. One of the fundamentals of film production in this country is, and always has been, that there is a home market comprising a population of only 48 million.
The costs must always be related to that, and whether the American market is obtained or not, it is a gamble. Obviously, the American companies, with a home market comprising a population of 120 million film-minded people, can spend very much more than the film companies in this country on scenario writers, technicians, sets, the "star" system, and so on. When American film companies produce a film they can spend three times as much as we can in this country. The hon. Lady the Member for Epping (Mrs. Manning) referred to French films, about which I am in agreement with her in saying that they are very much better value for the money. But the American companies can spend two million dollars on a film, on which they can break even in the home market, and they make their profit over here, because we are both English speaking nations, and there is not the language difficulty as in the case of French films, and over the years we have grown to like American films. Of course, the British market is vital for the American film producer. The right hon. Member for West Bristol (Mr. Stanley) has had some experience in this regard, because he it was who was responsible for introducing the Cinematograph Films Act which imposed the last quota.

7.45 p.m.

Mr. Scollan: Is it not the case that it is not a question of liking American films, but of the American films being foisted upon the British public whether it likes them or not?

Mr. Granville: The fact is, there is a block booking system; there is an interlocking arrangement with many of the United States companies, which means they can supply to hundreds of cinemas every week one or two films, as the case


may be. I disagree with the hon. Member for Eton and Slough and I agree with the hon. Member for West Nottingham. If the Chancellor came down to this Committee next week and prohibited a large portion of the American film imports into this country it would mean virtually the shutting down of the cinemas and the putting on of variety.
There is at present, as the hon. Member for West Nottingham has said, a great studio shortage, about which the Board of Trade knows. If all the American films were excluded from this country—and I personally would have no grievance about it, none at all—we should be forced to produce films in cowsheds, in order to keep the cinemas open. The Board Of Trade have some responsibility in this— unless they want the cinemas to be shut down, or unless we are merely to show a film in this town this week end and in another town next week. To maintain a regular supply of films week after week requires a gigantic production, of which this country is not capable at the moment. Another important factor when dealing with the home market is that the cost of films is rising seriously today. We must face the fact, that in order to break even and make a profit, a British film can rely only on the home market here in Britain, whereas, an American produced film can break even in the United States and make its profit over here. The British film industry has no guarantee at all that if the production costs exceed the return obtainable from the home market, it will be able to recoup the balance from the United States.
That, I suppose, is what the Rank experiment is all about. It is a gamble. Many people think it will fail disastrously. Undoubtedly, the Board of Trade and the Chancellor must have had some information about the net results. Whether they are in a position to do what the hon. Member for Eton and Slough suggested— namely—to present a dollar balance sheet —I do not know. But I do think that before they use the powers of this enabling Clause it would be only right and proper —because the Committee takes a great deal of interest in this subject—to give us a dollar balance sheet I suggest that he should give some sort of interim report so that we can learn whether this Rank experiment will succeed or not. Another difficulty, which was referred to by the

hon. Member for Eton and Slough, is not only the shortage of studios and the rising costs, but the definite shortage of artists. The United States, with their enormous contract powers, can turn round and make very large offers for artists. If this Clause is accepted. shall we be in a position to find enough artists to increase production so that we can fill the cinemas?

Lieut.-Commander Braithwaite: Can the hon. Member give an indication whether his statements are in favour of this Clause or against it?

Mr. Granville: I found some difficulty, in listening to the hon. and gallant Member's introductory speech, in finding out whether he was in favour of it or not. Many attempts have been made to deal with the importation of films The right hon. Gentleman the Member for West Bristol (Mr. Stanley), when he was President of the Board of Trade. enacted the quota Measure, which is to be re-enacted next year. I say that this is an experiment well worth supporting at the present time.

Lieut.-Commander Braithwaite: Hear. hear

Mr. Granville: I am sorry that the right hon. Gentleman the Member for West Bristol is not going to make a speech, because if the Government cannot do what they want under this Clause, they will have to do what they want when his Act is re-enacted next year. Some hon. Members still think that we can get enough films, but how many prosecutions will have to take place because of non-fulfilment of quota obligations, I do not know. As I say, the Government ought to give us a balance-sheet. I have no doubt that before the right hon. Gentleman's Bill is re-enacted, we shall have the same sort of arguments he had to deal with on whether the exhibitors' quota is right or wrong
I have no doubt that as a result of this Clause there will be discussions going on in the film industry in this country and in the United States. I suggest that it might be possible to draw a line, and to say to the United States film industry that they can import into Britain a certain number of films, but if they import over that number, they must take the same number of British films in return. I think that it is a scheme which would work.


It might be well worth considering if negotiations are open between the American and British interests. This is another attempt to deal with the importation of films into this country, and an attempt to reduce the dollars the Government have to remit. It is a complex and difficult problem, but, on the whole, the Government should be given support on this Clause.

Mr. Scott-Elliot: I should like to consider first how we are to put on a tax, if we have to put on a tax, and next whether the tax should be put on at all. I have no objection at all to this way of putting on a tax. It is novel, and it is simple. Each film pays according to what it earns. We have to consider what will be the result. It is generally admitted, I think, that the average American film depends for its profits on the net earnings it gets overseas, and the bulk of those earnings are in this country. If we are to put a tax on American films coming into this country, we shall have to put it on at a substantial rate to get anything appreciable, and by so doing we put a considerable tax on the profits of American films. I do not pretend to be as well informed as my hon. Friend the Member for Eton and Slough (Mr. Levy) or my hon. Friend the Member for West Nottingham (Mr. O'Brien), but I am inclined to the view expressed by the latter. I feel that there may be a certain degree of American reaction, to put it no higher than that. It would be a very unfortunate thing at the present time, although I have no tenderness for American films which I do not think anything like as good as English films, if we did not have some regard to American interests.
I come to the alternative method mentioned by my hon. Friend the Member for Eton and Slough, namely, that we should put a footage tax of, say, £10 per foot on imported films. That would have a comparatively small effect on the expensive American feature films, but it would probably shut out the cheaper American films, which may not necessarily be bad films. I have been told by many people in the film industry that a film upon which a comparatively small amount of money has been spent is not necessarily a bad film. That takes us to the question of whether we have the capacity, in our film studios, to produce the requisite number of films to take the place of those

which are shut out. I do not think we have that capacity. There was the letter in "The Times" by Lord Grantley, to which reference has already been made, showing that we can make only 68 feature films; he also estimated that there might be an expansion by about 10 under certain conditions. It is improbable, therefore, that in the next two or three years we shall be able to take up the slack caused by shutting out some American films.
I do not wish to take up a long time on the question of the pros and cons of a single feature programme. A good point is that this would give the greatest possible impetus to the production of British films of all kinds, and in particular British shorts and documentary films, which are generally considered to be predominant throughout the world. It would have an educative effect on the public to see British documentaries instead of less good American feature films. Against that there might be a decline in cinema attendance. Some people might argue differently, but, as I understand the matter, it is likely that there would be a decline in cinema attendance, with the result that the revenue to be derived from Entertainment Duty might be reduced. For that reason, I prefer the method which my right hon. Friend is suggesting. The real point is whether we should put on this tax at all. I want to go a little further than my hon. Friend the Member for Eton and Slough, who seemed to throw cold water on this question of whether the Rank organisation would get films into America in a fairly big way. I speak subject to correction by the Parliamentary Secretary, but my information is that some kind of agreement has nearly, if not quite, been fixed up, that a definite number of British feature films will, for the first time, go into the big American circuits for showing in America. Obviously, that might earn a considerable greater number of dollars than anything we could obtain by putting on the tax which the Chancellor envisages. It was explained by the Lord President of the Council yesterday that it is the policy of the Government to proceed along expansionist lines. Those lines are particularly favoured in America, and I appeal to the Chancellor not to put on this tax unless he is certain that British films will not get a showing through American circuits. We should aim at expansion, rather than


restriction, in the interests of our two countries.

8.0 p.m.

Mr. Eccles: The Committee has had four or five speeches from experts on this subject, and two from the hem. Member for West Nottingham (Mr. O'Brien), to whom I want to say that I preferred the speech he made himself to the one which the hon. Member for Eton and Slough (Mr. Levy) made for him. I have no expert knowledge of the making of films, but I would like to say a few words about the tax. Can the Chancellor explain how he will ensure that the tax will not be passed on, because this is an income tax dressed up as a Customs duty? Unless the Board of Trade have complete control over the price at which each film is sold, or rented, so that this additional burden will not be added to the old price, we shall not save any dollars. We shall have to remit to America the same amount of dollars if it is possible for the person who sells the film to put up the price. Somebody would then have to pay more if the price was raised. We must be sure that there is no possibility of the price being advanced to cover this tax. That is a difficult administrative operation, but I hope we shall have an explanation of how it can be done.
I join with every other Member of the Committee in being anxious that we should cut down our dollar expenditure, and it is clear that films are less essential than many other things which we buy from America. I want to ask the Chancellor to take this point into consideration. Our dollar position is so bad that it is evident that many different negotiations and adjustments will have to take place between the Government and the Americans, so that we may get into a solvent position again. Is it in the best interests of the over-all dollar position that we should make these piecemeal pinpricks against the Americans? I am thinking about this matter as a businessman. If I have to deal with another businessman, and I want to sell to, or buy from, him a large number of articles, it is not likely that I would think that the best way to go about that would be to try to make him deal with me on a tender spot first. Our dollar shortage is so serious that what is wanted is general negotiations with America about our im-

port programme. I think solutions might be found by that method. I hope the Chancellor will assure us that this tax will not be put on unless he is sure that it fits in with all the other various changes and modifications that will Have to be made in our import programme from the United States.
Finally, I would like to see discrimination between French and North American films. I suppose that is impossible, and that under our agreement with the Americans, if we tax American films, we must tax all other kinds. [An HON. MEMBER: "SO we should."] Yes, I agree in principle that multilateral trading is much better in every way than any other kind of trading, but where shall we be if our dollar loan runs out, and another large loan is not made to us? We shall have to buy from those countries which are willing to sell; we shall be forced to make that sort of bargain and, that being so, I think it would be better to have French films here, and not shut our cinemas, than to have no films at all

Mr. Michael Foot: I realise that there is a strong desire in some parts of the Committee to get on to other matters, but I think it is right for a few minutes to continue this Debate, because it raises most important issues for a very important British industry, and we should consider this question, not only from the point of view of the dollar situation, which is a serious matter, in all conscience but, as my hon. Friend the Member for West Nottingham (Mr. O'Brien) said, from the general aspect of what will benefit the British film industry. The hon. Member for Chippenham (Mr. Eccles) brought the Debate back to the question of our dollar expenditure. It is because of the general feeling of the Committee about this matter that the Chancellor has the support of the Committee for the tax which he is proposing. Personally, I would be very much happier if he were actually putting a cut into effect, if he were actually proposing such a cut to the Committee. But all he has proposed is an enabling provision. In my view, there has been an unconscionable delay in applying cuts to the imports of American films on which we have to spend dollars.
There is a marked contrast in the way the Government have dealt with different items of dollar expenditure. There has been great speed in applying cuts to, say,


newsprint, and long delay in applying them to films. On balance, on the grounds of culture, or whatever may be advanced, newspapers have the right to be considered more favourably than films. That we should have the situation where, over two years, action has been taken on two or three occasions against the newspapers and the book trades, while nothing has been done in respect of films—

The Temporary Chairman: The hon. Member must keep to the question of the film industry, and not make the Debate too wide.

Mr. Foot: I apologise, Sir Robert, if I went too far. We hope that action will be taken on the subject of film imports. I think it is valuable to discover why there should have been this delay. I think the reason why there has been delay, and why there is still delay, is because of the excessive tenderness of the Board of Trade towards the Rank film monopoly, and because of their excessive readiness to treat the claims of the Rank monopoly organisation at their face value. The hon. Member for West Nottingham told us quite clearly what is the argument, and it is also the argument of the Rank films organisation. The argument is that even if we are spending £17 million worth of dollars in importing films from America, it is still true that they are trying to earn dollars in America, and we must not jeopardise the whole of that development. That is the whole of the Rank organisation argument. I support the plea that is made that if we are to base action on that kind of argument, and therefore delay in applying these cuts, it is essential that we should have in this Committee the figures on which we can make up our minds.
Never once has the Rank organisation made any attempt to give to the public of this country the figures on which they are basing their argument—the figures of what are the prospective earnings from the United States and the figures about these extraordinary arrangements that go on for bringing American stars and even American directors over to this country and giving them huge dollar incomes free of Income Tax. They have never given an account of these things, and of the amount of money spent in propaganda in America in order to earn the dollars which they say are coming along

later. They even boast about it. There was a remarkable article in the "Evening Standard" a week or so ago in which this matter was very plainly explained. It was a good deed in a naughty newspaper to reveal these facts. That article concluded with a remarkable statement by Mr. Rank's public relations officer to the reporter of the "Evening Standard." This was the statement: "The Rank organisation never gives any figures." We know that applies in their dealings with the British public, but does it apply also to the Board of Trade? Have they managed to extort any figures from this private organisation which is a powerful monopoly? We know what howls there are from the other side of the House if, for instance, the Coal Board do not provide figures every month. Here is an organisation, with a powerful monopoly situation in this country, which boasts that it never gives any figures. We want those figures, and before this Committee decides what it will do about the film industry, it ought to have the facts upon which these cuts can be based. I say that the facts revealed in the "Evening Standard" article, particularly in view of the critical dollar situation of this country amount to a first class scandal. It is our business today to try to get to the bottom of that scandal.
The main argument of the hon. Member for West Nottingham was a perfectly valid argument which he is entitled to advance. It is equally valid for us to contest it and strictly relevant to the kind of methods which we should use to check the import of films from America. The argument concerns the principle on which we are trying to base the prosperity of the British industry. The hon. Member for West Nottingham says that he believes that it is right for the British industry to base its prosperity on the idea of crashing into the American market. That has been the view held by the Rank organisation for a long time. Mr. Rank is now trying again, and he will not give any figures as to how far he has got, but he asks this Committee to hold off any cuts on films, although he does not give us the figures. This view of the Rank organisation that we can base the British film industry on crashing into the American market—

Mr. O'Brien: The hon. Member keeps referring to the Rank organisation, but there are others in the British film industry


besides Mr. Rank and his organisation, such as Alexander Korda and Herbert Wilcox—large independent producers of feature productions—and they all agree that it is necessary to get into the American market, so there is unanimity of belief in the trade on that point.

Mr. Foot: My hon. Friend says—

The Temporary Chairman: I hope the hon. Member is not going to follow that up. We are not dealing with films going into America, but the importation of films into this country.

8.15 p.m.

Mr. Foot: I hope I am not going outside your Ruling, Sir Robert, but I think the Debate has gone very wide, and I would submit that it is a proper consideration to discuss, when we are imposing a novel tax like this, the effects of that tax generally upon the British film industry. There are two alternative views on that subject to which I hope I shall be able to refer—one, the contention that we should crash our way into the American market; and the second that we should build up a British film industry by providing as many films as we possibly can for the British market. The hon. Member for West Nottingham says that the whole British film industry agrees with his view. I do not think so, because I know that many people in the film industry have long since argued that it is much better to go in for less expensive films and seek a policy from the Government which will assist that process. Instead of that, unhappily because of this delusion that we can crash our way into the American market, which the American companies themselves can fully provide for, for they can fill all the screen time in America, we have the attempt at the present time to Americanise the British industry which is a serious threat. We have got in charge of the Rank organisation today not the technicians and the artists and the people who in the last four or five years have enormously enhanced—

The Temporary Chairman: I must ask the hon. Member to keep to the subject before the Committee—that is, the importation into this country of American films and the tax thereon. There may be another view on this question, but that does not give the hon. Member the right to discuss it here.

Mr. Foot: I am sorry if I have gone outside what is legitimate, but I think if we are to deal with this matter in a way which would best assist not only the purpose of gaining dollars but would assist also the British industry we should discuss not merely the matter of a makeshift film tax such as we are discussing at this moment, but the renewal of the quota Act plus, possibly, some kind of a tax which would enable—

The Temporary Chairman: Let us get back to the new Clause and what it deals with. The hon. Gentleman is not dealing with the facts of the new Clause before us, and those matters with which he deals do not arise here.

Mr. Foot: I apologise again and I would appeal to the Chancellor to say that this tax is only to be regarded as a temporary measure for dealing with this problem and that it would be much better to have a quota approach to it. I appeal to him to recognise that a different kind of instrument will be needed to deal with the whole situation in a way which will assist the industry, and I would ask him to regard this tax as a temporary measure when dealing with the much bigger questions which it would be wrong for me at this moment to try to discuss.

Mr. Stanley: We have had a long and at times heated Debate, and I am sure no one who listened to our debates would have been prepared for the fact that at the end of that Debate everybody was going to support the Clause which we are now discussing. This may be tempting for one who was President of the Board of Trade and responsible for the Cinematograph Act, but despite the fields that have been opened up as to the Rank organisation, the proper way to build up the film industry in this country and whether we should Americanise the industry or not, I feel that we can leave that for next year when, as has been said, there will have to be another Cinematograph Act, and when all those questions will not only be important and interesting but will even be relevant.
I want to speak for only a very few minutes to say that we on this side of the Committee accept the new Clause which the Chancellor has put down. I do not mean necessarily that we accept it with glowing enthusiasm, or without certain criticism, but in the first place it is


obvious that no one who had listened to yesterday's Debate, or who was aware of the seriousness of our dollar position, could question the necessity of being in a position to take steps to reduce our dollar expenditure on films. No one, therefore, is entitled to oppose the Chancellor's proposals unless he is prepared to put forward proposals which will be equally useful from the point of view of dollar exchange and, as he might think, less disadvantageous or more advantageous from the point of view of the film industry. I confess at once that I do not particularly like the method which the Chancellor has chosen, but though I can think of other and, I believe, better ways, I think that when the hon. Gentleman comes to wind up he may be in a position to give me reasons why they are impracticable.
First, I dislike the Chancellor's proposal because it is a novel method of taxation and, therefore, one of whose operation we are uncertain. I sympathised very much with my hon. Friend the Member for Chippenham (Mr. Eccles) when he asked for an assurance that this tax, which is supposed to be a tax on dollar exports, will not in fact be converted into a tax on the cinema exhibitors in this country. In other words, are the Government satisfied that there is no way in which this tax can be passed on to the consumer in this country? Secondly, I agree with the hon. Gentleman the Member for Devonport (Mr. Foot) that it is a very great pity that when we are faced with a new tax of this magnitude and importance it is not possible at the same time to tell us what the rate of that tax is to be. Why was it not possible, at the same time as the new Clause was put down giving this power to the Chancellor, to tell the Committee, and to obtain the assent of the Committee to the way in which that power was to be used, at least in the first instance? I dislike giving powers of this kind unless we have at the same time an indication of the methods in which those powers are to be used.

Mr. Tiffany: Surely it is a question of how many dollars were expected to be earned in America by British films?

Mr. Stanley: The right hon. Gentleman knows how many dollars are earned or expected to be earned. What he must

know approximately is how many of those he wants to stop. What I should have liked to know was the rate of duty he intends to put upon the film after the new and rather complicated process of valuation has taken place. I should prefer to have that information now than to wait for a quite indefinite time and then have it given to us in an Order. Quite frankly, I should have preferred to deal with the matter by the ordinary method which will be open to us within a few months—namely, by raising the quota of British films. That is the way we have done it in the past, and, on the whole, I think that it is still the most satisfactory way. I understand that the objection to it is one which, for the present at any rate, we certainly cannot overcome—that the studio space, technicians and so on are not sufficient to allow this country immediately to fill the gap which would be left if we reduce the number of American films by as increase in the quota.
The other alternative, which certainly would seem to me to be preferable, would be for the Chancellor of the Exchequer to say exactly how much in dollars he was prepared to allow film companies to take out, and to freeze the rest—that, in fact was the method adopted in the early days of the war—and say, "In addition to that, you may take out from this country, pound for pound, or dollars for pound, what you allow us to earn in your country." You would thus have a basic amount which the American film industry could count on, and above that an unlimited extra amount according to the opportunities that they gave us, and the success We-can make of those opportunities. There again, I am afraid that there is a snag. Even if the right hon. Gentleman were sympathetic to it, I am afraid that probably Bretton Woods or the Loan Agreement would prevent us from freezing the requisite number of dollars in the way I have suggested, and I have, therefore, reluctantly come back to the conclusion that if we are to take power to cut down the film imports—and obviously we must not only take powers but the time must come, and many think it has come, when those powers will have to be exercised— there is no alternative to the plan adopted by the right hon. Gentleman until we are able to increase our own abilities to produce.
For that reason we certainly shall not oppose the proposal in the Lobby, but may I say one word in conclusion? A great deal of this Debate turned on the activity of Mr. Rank. I have no connection with him and do not even know him, but naturally, since Board of Trade days, I have taken an interest in the film industry, and I have followed what Mr. Rank has been doing. He may be right or wrong, he may be going to succeed or fail, but when a man is at any rate trying to do what he and a great many others believe is a great thing for our film industry and for the trade of the country as a whole, I think it is a pity to refer to him as if he were just a money-making monopolist trying to get away with anything he can. I particularly resent the reference to his refusal to give to the public the exact figures of what he is making or hopes to make in America. The hon. and learned Gentleman the Solicitor-General is here. He and I have been sitting day after day in Committee on the Companies Bill upstairs, and it was laid down there, without any party division, that there may well be instances where it might be damaging to the whole prospects of a company to reveal publicly, estimates as to the business they are likely to do in a certain field before it is actually done. For that reason the right hon. Gentleman defended a proposal whereby the disclosure of that kind of information should not be made compulsory upon a company. I am sure he will be the first to say that in that refusal of Mr. Rank to which reference has been made, there is nothing really that could be regarded as against. the interests of the country or as a desire to keep from the public information the public are entitled to have.

8.30 p.m.

Mr. Foot: Is it not an insult to the public that on a matter of public interest— the amount of dollars earned in America —Mr. Rank's organisation should say deliberately to the reporter of a reputable newspaper that Mr. Rank's organisation never gives any figures?

Mr. Stanley: I am not defending the words P.R.O's use. I have not the same experience of P.R.O's as the hon. Member for Devonport (Mr. Foot). When the P.R.O. says that Mr. Rank never

gives any figures, he is talking nonsense. Mr. Rank has to publish a balance-sheet.

Mr. Gallacher: My offence is rank.

The Temporary Chairman: The right hon. Gentleman the Member for West Bristol (Mr. Stanley) will be out of Order if he pursues that subject.

Mr. Stanley: I will most certainly not offend against your Ruling, Sir Robert, but I was under the impression that as you had allowed the hon. Member to put a question to me, you would allow me to answer it.

The Temporary Chairman: The hon. Member for Devonport raised the matter but on that and other matters I ruled him out of Order. The right hon. Gentleman must not extend the explanation and carry on discussion on the matter.

Mr. Stanley: Then we will carry it on no further, except to say that we shall have an opportunity, I hope, next Session to discuss all these very important, very interesting and very controversial matters in a new setting when they will be more relevant. Meanwhile, I feel that we have no alternative but to support the Chancellor in what he is doing.

The Parliamentary Secretary to the Board of Trade (Mr. Belcher): I will do my best, although it is rather difficult, not to transgress if I enter into a discussion on the many controversial matters mentioned during the last two hours. I could wish that more of the time had been devoted to dealing with this simple, straightforward issue of what form the import duty is to take if it is to be applied. The right hon. Gentleman the Member for West Bristol (Mr. Stanley) said he would like to know during the Committee stage the rate which would be included in the orders. That must depend on the circumstances existing at the time if and when an order is made. The very making of an order is bound to depend on what happens to the present adverse dollar balance. It may be that some of the matters referred to today, will influence the making or otherwise of this tax, and they will certainly influence the rate at which it will be imposed.
We were faced with the necessity— with which every hon. Member who has spoken agrees—of reducing the dollar expenditure on films. Last year some-


thing over £17 million of dollars was paid out for the showing of American films in this country, and the flow in the opposite direction was exceedingly small. We could have gone straight out for a cut in the importation of American films and could have restricted the number coming into the country, but it has been stated quite correctly by several hon. Members this evening that in this country we just do not possess the studio space and the other things required to make the films to meet the needs of this country.
It would not be the desire of any hon. Member that we should, at this time, deprive our people of the opportunity to go to the pictures if they want to do so. That is not the kind of cut we want to impose on our own people. It has been suggested by hon. Members, including the hon. Member for Eton and Slough (Mr. Levy) that we could have had a direct footage tax, but the objection to the footage tax is that we may not be trapping the same number of dollars as we should if we dealt with the ultimate value of the film in the way we propose. We might have a film of short duration, costing little money. It might be what would be called a "money spinner" in this country. If we had a footage tax, we should have had as much as we could get, quite irrespective of the amount of money earned by the film. We should be restricted to that smaller amount. Obviously, of course, you may have a large and expensive film of the kind which we are accustomed to receive from Hollywood, which may turn out to be a "flop," and then you would be faced with the necessity of revising your values. The only alternative which commended itself to us was this scheme, which aims not necessarily at stopping American films from coming into this country, but at stopping American dollars from going out of this country to the United States of America in payment for the showings in this country.
There is another possible alternative to which I do not wish to refer at length. That is the expansion of the British film industry, and the showing of more British films in the United States of America. On that I would only say that I join with the right hon. Member opposite in deploring some of the suggestions which have been made tonight about a certain organisation, particularly the suggestion that the

Board of Trade is too tender-hearted in its dealings with that or any other organisation. I do not think it is a question of being tender-hearted; I believe that all these organisations—it is not confined to one—which are doing their best to expand the British film industry, and particularly to expand trade with the United States of America, should be given the support of the Government Department responsible, without necessarily Government Departments indulging in tenderheartedness which, I can assure the right hon. Gentleman, they do not.
It seemed to me that one of the really important points which emerged from the discussion was that raised by the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) who opened the Debate, by the right hon. Member for West Bristol and by several other hon. Members who have spoken. That was the question of the passing on of the duty, and I have been asked to deal with that. To forestall any alarm which may be felt in this country and to make the position clear in America—it is important, because we do not want to do anything which will lose us the good will of the American film industy, particularly at a time when some organisations are doing their utmost to advance British films in that country—I would make this clear: If and when these higher duties have to be imposed, we should not hesitate to take any action to prevent them from being passed on by an increase of charges, to the cinema proprietors or to the cinema-going public.
The object of the duty is to save dollars, and if the cost of the duty were passed on to the consumer—to the proprietor of the cinema or to the person who goes there—obviously we would be frustrating our own object and would not be saving dollars. What we would attempt to do in the first place would be to get some price-freezing voluntary agreement inside the film industry. If we could not get a voluntary agreement, obviating the necessity for a statutory control of rentals, we would have to use such powers as we possessed. We possess powers under existing price control legislation, under the Goods and Services Act, 1941, and under Defence Regulation 55AB and I assure the Committee that if there were any evidence for the necessity


of using those price control powers, we would not hesitate to use those powers to stabilise rentals at what we would regard as the proper level.
There has been some talk about the earnings of British films abroad and the possibility of producing a balance sheet. I do not feel that in connection with this particular tax, the permissive power for which we are seeking tonight, it is necessary or desirable for me to attempt to pose before the Committee a balance-sheet of the kind which has been suggested. In any case, I quite agree with the right hon. Member opposite, that even if those figures are possessed by the Treasury and by the Board of Trade, as, of course, they are. I do not know that it would be proper for me or for any other representative of the Government to pass on, willy-nilly, to the general public information which has come into our possession in confidence.
Then my hon. Friend the Member for West Nottingham (Mr. O'Brien), who has a very great interest in and knowledge of the film industry, expressed his apprehensions that perhaps the timing of this announcement may have been unfortunate. The last thing we would wish to do would be to interfere with the work of anyone who was attempting to further British interests on the other side of the Atlantic Ocean. But we are faced with this very bad adverse balance of dollars in the film industry. The payment out of the country is £17 million, and the amount coming in is very much smaller. Our friends must understand that this is not directed against the United States film industry because we do not like United States films, but is a matter of sheer necessity for this country to save dollars, which we hope will be saved by this method.
My hon. Friend asked that the Chancellor should consult with both sides of the industry on the operation of the tax. I think he has already had that assurance from the Chancellor, and I hope as, when, and if necessary the Chancellor will take the trade into consultation and endeavour to agree with them as to how this tax should be imposed, how much it should be, and any other matters of detail which are necessary. The Government are entitled to assume that the Committee are agreed, first, that it is necessary to do something about reducing this dollar ex-

penditure, and, secondly, that while there may be several alternative methods of dealing with it, this method, while it may be novel and, therefore, must be regarded with the closest attention by those who give attention to fiscal matters, is about as practicable as any which could be advanced. I hope we are going to be given this permissive power this evening by a Committee which agrees, if not with all the details, with the necessity for it, and agrees that we should have that power.

Mr. Scollan: All that is sought in this new Clause is
power to alter or add to Section 10 of the Finance Act, 1935
It is very difficult for the Committee to assess the exact value when we do not know exactly what is going to be put into operation. There are, however, two or three things which must be considered in connection with the American film industry and the dollar situation at the moment. An hon. Member on the Opposition side said that this was not the time to bring about pinpricking with the United States. I entirely disagree. I think this is the time when every section of any industry in the country that requires dollars should face the fact that food must come first. Every other interest must be subordinated to that, and that in turn must be transferred to the United States. It must be forced on them that unless this country gets some kind of relief from the situation which was outlined in the Debate yesterday, certain interests in the United States are going to suffer.
I deplore the fact that some hon. Members are prepared to put the interests of a particular section of the community here before the interests of the whole nation. Has not the whole Debate yesterday, and the whole of past experience, proved that we are facing a situation which has never faced any country before, and that the necessary relief and wealth of the nations devastated by the war are centred in one particular nation? These problems have to be brought home to the people in that nation. How can we bring them home? By telling them frankly and plainly that we cannot bring their films into the country and pay for them, but that we require from them something far more important. As a matter of fact, if this-


country were in the normal prewar position, I would still support this proposal because of the question of the educational value of films. We pay great sums of money for the education of our children; they are taught to speak English in school—

8.45 p.m.

The Temporary Chairman: The hon. Member is getting wide of the new Clause. I must ask him to keep within its scope.

Mr. Scollan: Is it in Order to examine the reasons this power should be given?

The Temporary Chairman: Certainly. That is what the Committee is doing; but it is not a question of bringing in a matter of the kind which the hon. Member was raising.

Mr. Gallacher: On a point of Order, Sir Robert. In a case of this kind, when an hon. Member is arguing in favour of a tax on American films, if it should be necessary, is it not a good argument to say that we spend a lot of money on educating our children, and that it is very bad policy to spend money to destroy that education by buying American films?

The Temporary Chairman: The question before the Committee is that of putting a tax on films. That is the point to which we have to keep, and not proceed as though we were making speeches on Second Reading.

Mr. Scollan: I find myself in great difficulty if I am not allowed to discuss why we should or should not impose this tax. I am examining the reasons why a tax should be or should not be imposed. I have listened to hon. Members putting forward a case against any tax being imposed. I cannot understand how it is not in Order to put a reason why the tax should be imposed. The power which is to be given to the Chancellor, if this Clause is approved, is for the primary purpose of meeting the dollar situation, according to the information we have been given. The argument has been advanced against it that it will injure the infant industry of film-making in this country. I thought that my hon. Friend, when replying, might have told us, "We shall be very sorry if we injure the growing film industry of this country, but when we have Hobson's choice of food or films, obviously it must be food." That is the situation.
On the other hand, is the proposal to be considered from the point of view of whether the loss of these films if this tax were imposed, would be a national loss? I am of the opinion that the country would benefit greatly if the cinemas were only to be open one day per week. I think that the sort of education provided by Hollywood films largely destroys the morality of the children. For that reason, we should advise the Chancellor to impose the highest tax he possibly can, even if times were normal. It is no use the Chancellor raising money and taxing us on everything else for the great educational scheme upon which we have embarked, and allowing someone else to come along and destroy it. That is what we are getting today. Even the English language has been largely destroyed. It is quite common to hear, "O.K." and "Oh, yeah."

The Temporary Chairman: The hon. Member must address himself more to the point of the new Clause.

Mr. Scollan: In conclusion, I say to the Chancellor that when he imposes this tax, I hope it will be sufficient to destroy the evils of the cinema and place the country in a far better dollar position than it is in today.

Clause read a Second time, and added to the Bill.

Orders of the Day — THIRD SCHEDULE.—(Purchase Tax—Intermediate Rate.)

Mr. Dalton: I beg to move, in page 61, line 37, at the end, to add:
3. Mechanically propelled road vehicles constructed or adapted solely or mainly for the carriage of passengers, or having, to the rear of the drivers' seat, roofed accommodation lit by side windows and fitted with, or constructed or adapted for the fitting of, seating for passengers, being vehicles of a retail value of more than one thousand two hundred and eighty pounds the vehicle.

This Amendment is consequential.

Captain Crookshank: It is not quite consequential, because it brings out a point which was raised last week, unless I have misread the Amendment.

The Temporary Chairman: It may be true that this matter was discussed last week. The Chancellor's Amendment was discussed with the three Amendments on Clause 8. Does the right hon.


and gallant Gentleman wish to move his Amendment to the proposed Amendment.

Captain Crookshank: I beg to move, as an Amendment to the proposed Amendment, in line 2, to leave out from "passengers," to "being," in line 4.
I do not think that we need keep the Committee very long on this matter because the main question has been discussed. The important words here are:
…or having, to the rear of the driver's seat, roofed accommodation lit by side windows and fitted with, or constructed or adapted for the fitting of, seating. …
I think that is a misprint. It must be that the comma is in the wrong place. I understand that this brings within the ambit of the duty utility vans in respect of which an Order was passed last week. I would like to ask whether I am right in that because, if so, it opens up an argument which I did not intend to repeat but which we put from this side of the Committee last week. We still feel that it is wrong in this case to bring utility vans within the scope of this provision. Primarily speaking, they are goods carrying vans. There is no question about that. They are limited as such. They are limited in the speed per hour that they legally are allowed to go. I understand, for example, and this is only one example. that they are prohibited from going into the Royal Parks. Therefore, as utility vehicles, they are considered to be goods carriers. If they have these side windows they are to come within the full scope of the tax. I understand that already a considerable export trade is being developed in utility vans which have side windows. The Financial Secretary the other night, in his disingenuous way, said that anybody could get out of paying the tax. He said that they need not have the windows and that that would take them out. That may or may not be true, but, of course, the foreigner who buys these vans would be rather surprised if he expected to have side windows and found they were not there, and that they had been taken out just because of the rather odd incidence of taxation in this country.

Mr. Sydney Silverman: Why does a goods van need side windows?

Captain Crookshank: We have had all that before. I was not proposing to go into it again, but if the hon. Gentleman wants it he can have it. I was merely making the point that the foreigner would find it rather difficult if he had expected the utility van which he had ordered to have side windows and it turned up without side windows because they had been taken out—

Mr. Glenvil Hall: The effect of the right hon. and gallant Gentleman's Amendment is to take out the windows.

Captain Crookshank: It is not to take out the windows: it is to take utility vans out of the scope of this tax, windows or no windows. I hope that the right hon. Gentleman will see that it would not be advantageous, whatever may be said on the main issue, to have these words added to the Schedule. I apologise for moving the Amendment briefly but recently we had a long Debate on the subject.

Mr. Hale: I would like to ask a question and to put a point to the Financial Secretary before he replies. I have no doubt that I must be completely wrong, but, because I do not know why I am wrong, I feel I ought to ask. I went through this wording as carefully as I could and tried to find out what vehicle was intended. I asked a colleague of mine, who thought it meant a carriage, though I did not think that it meant that. I have read it through again two or three times to see if it is intended to relate entirely to utility carriages. Will my right hon. Friend say what the words do mean? Will they eliminate the ordinary passenger bus? What words will eliminate the five-seater Rolls Royce car. Do they include any vehicle having roofed accommodation lit by side windows, which certainly includes buses and cars constructed for the carriage of passengers, because, if so, it may well be argued that that would include the five-seater car? I suggest that some consideration of those words should be made, or the profession to which I have the honour to belong may make some profit from them.

Mr. Glenvil Hall: Perhaps I may answer first the hon. Member for Oldham (Mr. Hale). He need not worry, because tram-cars, omnibuses, invalid carriages, perambulators and ambulances are exempt. They are exempted under the earlier Purchase Tax arrangements. I do not


want to have to explain here how these things, like a jigsaw puzzle, dovetail one into the other—

Captain Crookshank: They are not taxed.

Mr. Hale: This relates, I think, to Section 68 (b), which defines the articles not mentioned in the Seventh Schedule of the Act of 1942—walking sticks, mirrors, fur coats and so on There is a reference to the second column of the Schedule of this Act, but there is no second column to that Schedule, so we get no further. Could they not have been put on the Order Paper today?

Mr. Glenvil Hall: Not only the 1942 Act, but also the 1940 Act, is concerned here, and my hon. Friend would have to refer to the Seventh Schedule in the one case, though I have forgotten the number of the Schedule in the other. However, if he will allow me, I will take him into the Library and show him the column of the Schedule in the Act where these vehicles are dealt with—the ambulances, perambulators, trolley-buses and the rest which are exempt.
This particular Amendment which stands in the name of my right hon. Friend, applies the law as it now exists for the ordinary passenger vehicle to the type of vehicle the Committee has just been discussing. It does no more and no less. It means that a Rolls Royce, for example, will come under the same regulations as the passenger-carrying vehicles we discussed the other night, when I defended a new Statutory Rule and Order. Then, we were dealing largely with shooting brakes, and, although a shooting brake does not normally cost the same amount as a Rolls Royce. Unless those words are inserted and this Amendment resisted, it would be possible for a Rolls Royce to be used as a utility vehicle and to escape being taxed at 66⅔ per cent. That is what we want to avoid. I gave an undertaking the other night on behalf of my right hon. Friend that, if it were found that vehicles which, quite properly, should not be caught up by the new Statutory Rule and Order were, in fact, caught up, I would arrange on a suitable occasion for another Statutory Rule and Order which would definitely exempt them by name. That undertaking still stands. We are now in touch with the trade organisations concerned, and are

considering the question with them. If we find there are vehicles which should escape this tax, we shall be happy to ask the House to exempt them.

9.0 p.m.

Lieut.-Commander Braithwaite: I do not know whether the hon. Member for Oldham (Mr. Hale) feels that any light has been shed in consequence of the Financial Secretary's explanation. Personally, I should have thought it doubtful. I am sorry the hon. Gentleman was not with us the other night when we were discussing the Ways and Means Resolution. An intervention on his part would have been of great value, because we went, in some detail, into what this covered. We held that hearses were not passenger carrying vehicles, which I, personally, thought was wrong, because, not only do they carry a passenger, but one who travels in great comfort. We also discussed Black Marias, and such matters.
I would like to tell the Financial Secretary that, since that Debate took place, I find that farmers in my constituency are extremely disappointed that these utility vans have been brought within the ambit of this taxation. I do not want to repeat the Debate we had the other night, but it will be recalled by hon. Members who were present that a "shooting brake mentality" came over the Treasury Bench. The whole approach to the matter was, "Here is the squire going out for a day's shooting. Let us tax him. These brakes are immoral vehicles; let them be taxed." The Debate showed that the term "shooting brakes" was an inaccurate description of these utility vans, which are used, to a large extent, for agricultural purposes and for the carriage of goods.
I rise only to say that the Financial Secretary has really got us no further this evening than he did on the previous occasion. What did he say to the hon. Member for Oldham, who very properly said that he, as a lawyer, found difficulty in interpretating the words and that he thought they might be profitable to has profession? The Debate of the other night ran on similar lines. We said that there was obscurity. The Financial Secretary admitted that the matter was obscure and said, "There may be hard cases which may come within this definition. Give me this Clause which nobody understands, and, in due course, if some-


thing emerges therefrom, we will try to put it right." That is an extraordinary method of legislation. It is the sort of hit and miss business which we have had ever since this Government came into office—fuel, food, fags and films. I would like to remind the right hon. Gentleman of what he said the other night. He said:
As I said frankly in my opening speech, we have great difficulty in finding a definition. We shall possibly find, in spite of trying to choose words, that certain types of utility vehicles which it is desired to exempt will be caught up. If that is so, I have to tell the House that later on we will very willingly, after consultation with the trade association concerned, come to the House and ask it to agree to another Order which will let out the particular vehicles, which we are all agreed should not be covered by this Order."—[OFFICIAL REPORT, 2nd July, 1947; Vol. 439, c. 1470.]
What a magnificent example of lucidity in legislation. Was ever the cart more firmly placed before the horse?—"Let us pass a law. We do not know what it means, but, later on, we will have a look at it, and we will consult the trade association when it is all over, instead of adopting the normal procedure." It is usual for these discussions to take place beforehand. Little wonder that the nation is sliding down.

Mr. Charles Williams: I would like to ask two questions on points which, up to now, have been rather obscure to me. Most of us, in one way or another, are interested in the countryside, and a considerable number of vehicles are used mainly for the carriage of goods but are occasionally used to carry passengers, although not very often. What I would like to know is precisely how, in view of the wording,
solely or mainly
one will define whether or not these utility vehicles are used for the purpose of carrying passengers. I can understand that in the case of a bus or a lorry, it is obvious. I can understand that if they have windows in them they come under the tax. But I think that those words,
solely or mainly
are rather obscure. If a shopkeeper in West Scotland, for instance, was delivering groceries and gave a lift to one or two passengers and charged them for the ride, would it be a utility van for the purpose of delivering goods? Apparently, it would depend on whether the van had

side windows or not, among other things, possibly. Obviously, if it is used for the distribution of goods it is a utility van. I think we might be told what sort of ideas the Treasury have—presumably, they have some sort of ideas—as to what the word "mainly" means. The other question which is exercising my mind is how this sum of £1,280 is arrived at. I am sure the Treasury have a reason, but I do not understand how they arrive at these words:
…a retail value of more than one thousand two hundred and eighty pounds.

The Deputy-Chairman: I am sorry to interrupt the hon. Member, but I would point out that we are now discussing the Amendment to the Amendment which seeks to leave out certain words.

Mr. Williams: I apologise very sincerely for having strayed away from the Amendment. I will raise the point on a more suitable occasion when the Amendment has been disposed of. I thought, possibly, we might be covering the whole matter now. If we are not, I shall have to use my opportunity later.

The Deputy-Chairman: Possibly the hon. Member is not aware that the Amendment on which he could have raised this point was discussed on Clause 8.

Sir P. Hannon: In view of the size of the Budget for which the Government are responsible in these days, I doubt whether it is worth while dragging in such a small element of taxation of this description, bearing in mind the small amount of money which it would bring to the Exchequer. In the circumstances of the time, when we are dealing with figures of vast magnitude, it is a pity to drag into the financial policy so small a matter as the revenue to be derived from the taxation of vehicles. During all these discussions on motor taxation, the firm of Rolls Royce is constantly brought in as an example of the highest possible level—

The Deputy-Chairman: I must remind the hon. Member that he is going far beyond the scope of the Amendment.

Sir P. Hannon: I apologise. Other firms produce motor cars in this country as well as Rolls Royce, and Rolls Royce ought not to be made a sort of standard for comparison. The ordinary motor


manufacturer, too, is concerned with this Amendment. I would like to state the case of one of the smaller and unpretentious manufacturers who receives a large order for cars to be sent overseas.

The Deputy-Chairman: I am sorry to interrupt the hon. Member again, but the Committee is now discussing the Amendment moved by the right hon. and gallant Member for Gainsborough (Captain Crookshank).

Sir P. Hannon: Of course, if the right hon. and gallant Gentleman the Member for Gainsborough makes a suggestion to

the Committee, I bow at once, but I do suggest that this is a really silly tax to impose on a very useful vehicle, useful for the farming community and many people in the countryside. Above all, do not let us always refer to Rolls Royce cars as the best in this country. We produce other cars. We produce the Daimler. which is the father of all cars.

Question put, "That the word pro posed to be left out stand part of the proposed Amendment."

The Committee divided: Ayes. 280. Noes, 118.

Division No. 306.]
AYES.
[9.12 p.m.


Adams, Richard (Balham)
Davies, Harold (Leek)
Irving, W. J


Adams, W. T. (Hammersmith, South)
Davies, R. J. (Westhoughton)
Isaacs, Rt. Hon, G A


Allen, A. C. (Bosworth)
Davies, S. O (Merthyr)
Janner, B.


Allen, Scholefield (Crewe)
Deer, G.
Jeger, G. (Winchester)


Alpass, J. H.
de Freitas, Geoffrey
Jeger, Dr. S W. (St. Pancras. S.E.)


Attewell, H. C.
Delargy, H. J
John, W.


Austin, H. Lewis
Diamond, J.
Jones, D. T (Hartlepools)


Awbery, S. S.
Dodds, N. N
Jones, Elwyn (Plaistow)


Ayles, W. H.
Donovan, T
Jones, J. H. (Bolton)


Ayrton Gould, Mrs B
Driberg, T. E. N.
Jones, P. Asterley (Hitchin)


Baird, J.
Dugdale, J (W. Bromwich)
Keenan, W.


Balfour, A.
Dumpleton, C. W.
Kenyon, C.


Barnes, Rt. Hon A. J
Ede, Rt. Hon. J. C.
Key, C. W.


Barstow, P G.
Edwards, Rt. Hon Sir C. (Bedwellty)
Kinghorn, Sqn.-Ldr. E.


Barton, C.
Edwards, W. J. (Whitechapel)
Kinley, J.


Battley, J. R.
Evans, E. (Lowestoft)
Kirby, B. V


Bechervaise, A. E.
Evans, John (Ogmore)
Lang, G.


Benson, G.
Evans, S. N. (Wednesbury)
Lavers, S.


Berry, H.
Fairhurst, F.
Lee, F. (Hulme)


Beswick, F.
Farthing, W. J
Leonard, W.


Bing, G. H C
Fletcher, E G M (Islington. E.)
Leslie, J. R.


Binns, J
Follick, M.
Lindgren, G. S.


Blenkinsop, A
Foot, M. M
Lipton, Lt.-Col M


Blyton, W. R.
Forman, J. C
Logan, D G


Bowden, Flg.-Offr. H. W
Fraser, T (Hamilton)
Longden, F


Bowles, F. G (Nuneaton)
Gaitskell, H. T. N
Lyne, A. W


Braddock, Mrs. E. M. (L'pl, Exch'ge)
Gallacher, W.
McAdam, W


Braddock, T. (Mitcham)
George, Lady M Lloyd (Anglesey)
McAllister, G


Brook, D. (Halifax)
Gibbins, J.
McEntee, V La T


Brooks, T. J. (Rothwell)
Gilzean, A
McGhee, H G.


Brown, George (Belper)
Glanville, J. E. (Consett)
Mack, J. D


Brown, T. J. (Ince)
Greenwood, Rt. Hon. A. (Wakefield)
McKay, J. (Wallsend)


Bruce, Maj. D W T
Greenwood, A. W J (Heywood)
McKinlay, A S.


Buchanan, G.
Grenfell, D R
Maclean, N. (Govan)


Burden, T. W.
Grey, C. F.
McLeavy, F.


Burke, W A.
Grierson, E.
Macpherson, T (Romford)


Butler, H. W. (Hackney, S.)
Griffiths, Rt. Hon. J. (Llanelly)
Mallalieu, J. P. W


Callaghan, James
Griffiths, W. D. (Moss Side)
Mann, Mrs. J.


Carmichael, James
Guest, Dr. L Haden
Manning, C. (Camberwell, N.)


Castle, Mrs B. A
Gunter, R. J
Manning, Mrs. L. (Epping)


Champion, A. J
Guy, W. H
Marquand, H. A


Chetwynd, G R
Haire, John E (Wycombe)
Marshall F (Brightside)


Cobb, F A.
Hale, Leslie
Mathers, G


Cocks, F. S.
Hall, W G.
Medland, H. M


Coldrick, W.
Hamilton, Lieut.-Col. R
Middleton, Mrs. L.


Collick, P.
Hannan, W. (Maryhill)
Millington, Wing-Comdr E, R


Collindridge, F.
Hardy, E. A.
Mitchison, G. R


Colman, Miss G. M
Harrison, J
Monslow, W


Comyns, Dr. L.
Hastings, Dr. Somerville
Moody, A. S.


Cooper, Wing-Comdr G
Henderson, A (Kingswinford)
Morgan, Dr. H B


Corbet, Mrs. F. K. (Camb'well, N.W.)
Henderson, Joseph (Ardwick)
Morley, R.


Corlett, Dr. J.
Hewitson, Capt. M
Morris, P (Swansea, W.)


Corvedale, Viscount
Hobson, C. R
Morrison, Rt. Hon H (Lewisham. E.)


Cove, W. G
Holman, P
Mort, D L


Crawley, A
Holmes, H. E (Hemswoth)
Moyle, A.


Daggar, G
House, G
Nally, W.


Daines, P
Hoy, J.
Naylor, T. E


Dalton, Rt. Hon H.
Hubbard, T.
Nichol, Mrs M E (Bradford, N.)


Davies, Edward (Burslem)
Hudson, J. H. (Ealing, W.)
Nicholls, H R (Stratford)


Davies. Ernest (Enfield)
Hughes, H. D (Wolverhampton. W)
 Noel-Baker. Rt. Hon P J (Derby)




O'Brien, T.
Shawcross, Rt Hn. Sir H. (St. Helens)
Ungoed-Thomas, L


Oldfield, W. H
Shurmer, P
Usborne, Henry


Oliver, G H
Silverman, J (Erdington)
Vernon, Maj. W F.


Orbach, M.
Silverman, S. S. (Nelson)
Viant, S. P.


Paling, Rt. Hon. (Wilfred Wentworth)
Simmons, C. J.
Walkden, E.


Palmer, A M F
Skeffington, A. M.
Wallace, G. D. (Chislehurst)


Pargiter, G. A.
Skinnard, F. W.
Wallace, H. W. (Walthamstow, E.)


Parkin, B. T.
Smith, H. N. (Nottingham, S.)
Watkins, T. E.


Paton, J. (Norwich)
Smith, S. H. (Hull, S.W.)
Watson, W. M


Pearson, A.
Sorensen, R. W.
Webb, M. (Bradford, C.)


Peart, T. F.
Soskice, Maj. Sir F.
Weitzman, D.


Platts-Mills, J. F. F.
Sparks, J. A.
Wells, P. L. (Faversham)


Poole, Major Cecil (Lichfield)
Stamford, W.
Wells, W. T. (Walsall)


Porter E. (Warrington)
Steele, T.
West, D. G.


Pryde, D. J,
Stewart, Michael (Fulham, E.)
Westwood, Rt. Hon. J.


Pursey, Cmdr. H
Strauss, G. R. (Lambeth, N.)
White, H. (Derbyshire, N.E.)


Randall, H E
Stross, Dr. B.
Whiteley, Rt. Hon. W


Ranger, J
Stubbs, A. E.
Wilkins, W. A


Reeves, J.
Sylvester, G. O.
Willey, F T. (Sunderland)


Reid, T. (Swindon)
Taylor, H. B. (Mansfield)
Willey, O. G. (Cleveland)


Rhodes, H.
Taylor, R. J. (Morpeth)
Williams, D. J. (Neath)


Richards, R.
Taylor, Dr. S. (Barnet)
Williams, J. L. (Kelvingrove)


Ridealgh, Mrs. M.
Thomas, D. E. (Aberdare)
Williams, Rt Hon. T. (Don Valley)


Roberts, Goronwy (Caernarvonshire)
Thomas, Ivor (Keighley)
Williams, W R (Heston)


Robertson, J. J. (Berwick)
Thomas, I. O. (Wrekin)
Willis, E.


Rogers, G. H. R.
Thomas, George (Cardiff)
Wills, Mrs. E A


Ross, William (Kilmarnock)
Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)
Wise, Major F. J


Royle, C.
Thorneycroft, Harry (Clayton)
Woodburn, A.


Scollan, T.
Thurtle, Ernest
Woods, G, S


Scott-Elliot, W
Tiffany, S.
Yates, V. F.


Segal, Dr. S.
Titterington, M. F.
Young, Sir R. (Newton)


Shackleton, E A A.
Tolley, L.
Zilliacus, K


Sharp, Granville
Tornlinson, Rt. Hon. G



Shawcross, C. N. (Widnes)
Turner-Samuels, M.
TELLERS FOR THE AYES:




Mr'Snow and Mr. Popplewell.




NOES.


Agnew, Cmdr P. G.
Headlam, Lieut.-Col. Rt. Hon. Sir C
Rayner, Brig R


Amory, D. Heathcoat
Hinchingbrooke, Viscount
Reed, Sir S. (Aylesbury)


Assheton, Rt. Hon. R.
Hollis, M. C.
Roberts, H. (Handsworth)


Barlow, Sir J.
Holmes, Sir J. Stanley (Harwich)
Roberts, Maj. P. G. (Ecclesall)


Beamish, Maj. T. V. H
Howard, Hon. A.
Robinson, Wing-Comdr. Roland


Beechman, N. A.
Hutchison, Lt.-Cm. Clark (E'b'rgh W.)
Ropner, Col. L


Bennett, Sir P.
Jeffreys, General Sir G.
Ross, Sir R. D. (Londonderry)


Birch, Nigel
Jennings, R.
Sanderson, Sir F.


Boles, Lt.-Col. D. C. (Wells)
Kendall, W. D
Scott, Lord W.


Bossom, A. C.
Kerr, Sir J. Graham
Shephard, S. (Newark,


Bowen, R.
Lambert, Hon. G.
Shepherd, W S- (Bucklow)


Boyd-Carpenter, J. A.
Lancaster, Col. C. G.
Smiles, Lt.-Col. Sir W


Braithwaite, Lt-Comdr. J. G.
Legge-Bourke, Maj. E A H
Smithers, Sir W


Bromley-Davenport, Lt.-Col. W.
Linstead, H N
Snadden, W. M.


Buchan-Hepbum, P G T.
Lipson, D. L
Spearman, A. C. M.


Butcher, H. W
Lloyd, Selwyn (Wirral)
Stanley, Rt. Hon. 0.


Clarke, Col. R S.
Lucas, Major Sir J.
Stoddart-Scott, Col. M.


Clifton-Browne, Lt.-Col G
Lucas-Tooth. Sir H.
Strauss, H. G. (English Universities)


Conant, Maj. R. J. E.
Macdonald, Sir P. (I. of Wight)
Sutcliffe, H.


Cooper-Key, E. M.
Mackeson, Brig H R.
Taylor, Vice-Adm. E. A. (P'dd't'n, S.)


Crookshank, Capt. Rt. Hon H. F. C.
MacLeod, J.
Thorneycroft, G. E. P. (Monmouth)


Crosthwaite-Eyre, Col. 0. E.
Maitland, Comdr. J W
Thornton-Kemsley, C. N.


Crowder, Capt. John E
Manningham-Buller, R. E
Thorp, Lt.-Col. RAF


Cuthbert, W. N.
Marlowe, A. A. H.
Touche, G. C,


Digby, S. W.
Marsden, Capt. A.
Turton, R. H.


Dodds-Parker, A. D.
Marshall S. H. (Sutton)
Vane, WMF


Dower, Lt.-Col. A. V. G. (Penrith)
Mellor, Sir J.
Wakefield, Sir W W


Dower, E. L. G. (Caithness)
Molsan, A. H. E.
Walker-Smith, D.


Drayson, G B
Morrison, Maj. J, G. (Salisbury)
Wheatley, Colonel M. J


Drewe, C.
Mott-Radclyffe, Maj. C. E.
White, Sir D. (Fareham)


Eccles, D. M.
Neven-Spence, Sir B.
White, J. B. (Canterbury)


Fletcher, W (Bury)
Nield, B. (Chester)
Williams, C (Torquay)


Fraser, H C. P. (Stone)
Noble, Comdr. A. H. P.
Williams, Gerald (Tonbridge)


Fyfe, Rt Hon Sir D. P. M
O'Neill, Rt Hon. Sir H
Willink, Rt. Hon H U.


Gage, C.
Orr-Ewing, I. L,
Willoughby de Eresby, Lord


Gammans, L. D
Osborne, C-
York, C


Glyn, Sir R.
Peake, Rt. Hon. O



Gomme-Duncan, Col
Peto, Brig, C. H. M
TELLERS FOR THE NOES:


Gridley, Sir A
Pickthorn, K.
Mr. Studholme and


Crimston, R. V
Ponsonby, Col. C E
Major Ramsay.


Hannon, Sir P (Moseley)
Raikes, H V



Question put, and agreed to.

Question again proposed, "That those words be there added."

Mr. C. Williams: Mr. C. Williams rose—

The Chairman: I would point out to the hon. Member that by general agreement of the Committee a discussion took place on this matter on an earlier Amend-


ment, when it was agreed that this Motion should be put formally.

Mr. Williams: On the other hand, I did want to ask a question on a matter which I do not think has yet been touched upon. I tried to put it on the earlier Amendment.

The Chairman: That may be, but when agreement is come to by the Committee as a whole, hon. Members must abide by that agreement, even if the decision was taken in their absence, as was no doubt in the case of the hon. Member in this instance.

Mr. Williams: In the circumstances, I will bow to the general convenience of the Committee. On the other hand, surely an agreement of that kind is not entirely binding on every Member, otherwise it makes it very difficult because we cannot be present in the Commitee all the time?

The Chairman: I am afraid I must differ. I appreciate the difficulty of the hon. Member, but the agreement is nevertheless binding.

Schedule, as amended, agreed to.

Orders of the Day — FOURTH SCHEDULE.—(Amendments of Purchase Tax enactments.)

Mr. Glenvil Hall: I beg to move, in page 63, line 33, at the end, to add:

"Part II.

ASCERTAINMENT OF RETAIL VALUE OF ROAD VEHICLES IN CONNECTION WITH THE TAX.

1. The following provisions of this Part of this Schedule shall have effect for the purpose of ascertaining in connection with the tax whether a vehicle is of a retail value of more than a specified amount.

2. The retail value of a vehicle shall be taken to be the price which it would fetch on a sale made by a person selling it by retail in the open market in the United Kingdom at the time when the tax chargeable in respect thereof becomes due, on the assumption that the seller has suffered the incidence of tax at the basic rate and that the price includes the amount of such tax.

3. For the purpose of computing the price which a vehicle would fetch on such a sale as is mentioned in the last preceding paragraph, the following circumstances shall be assumed. that is to say—

(a)the like assumptions shall be made (apart from that required by the last preceding paragraph) as are required for the purpose of valuations under section twenty-one of the Finance (No. 2) Act, 1940, by the Eighth Schedule to that Act (which requires assumptions as to the seller's bearing incidental expenses and being independent

of the buyer, as to patent and trade mark rights, and as to other matters), substituting therein references to the last preceding paragraph for references to the said Section twenty-one;
(b) if the purchase or importation of the vehicle in connection with which it is necessary to determine its retail value is of the vehicle without some part, accessory or other article of a kind with which it is for the time being the practice of the manufacturer of the vehicle to sell vehicles of the model in question or to advertise them for sale, or if it is shown that that purchase or importation is the subject of a transaction or of one of a series of transactions which include also a transfer of the property in, or other dealing with, some part accessory or other article suitable for use with the vehicle, it shall be assumed that the vehicle was sold as mentioned in the last preceding paragraph with that part, accessory or other article."

We have had a fairly comprehensive discussion covering this point, which I believe—I speak subject to correction— comes within the terms of the general agreement arrived at earlier. Therefore, I formally move the Amendment.

Captain Crookshank: I do not know that any previous agreement was made about this Amendment. The general discussion was on the plans for taxation. I understand this is a method of ascertaining retail value. Perhaps the right hon. Gentleman would forget what he said just now and briefly tell us what the point really is. I am sorry that the right hon. Gentleman is not going to respond, because we shall have to ask a few searching questions to get an idea what it is all about.

Mr. Glenvil Hall: We have surely discussed this.

Captain Crookshank: When?

Mr. Glenvil Hall: Earlier on. This Part II of the Schedule, the principle underlying it, and the method to be adopted, have been discussed. But if the right hon. and gallant Gentleman desires to ask questions I have not the slightest doubt that my right hon. Friend, or somebody on this Bench, will be willing to answer them.

Mr. C. Williams: I hope I may ask some questions, because I would like to know what this Amendment really means. Paragraph 1 says:
The following provisions…shall have effect for the purpose of ascertaining in connection with the tax whether a vehicle is of a retail value of more than a specified amount


That is clear, but I think we have a right to know from the Government precisely what figures they have in mind in relation to "a specified amount." Then we come to the words:
The retail value of a vehicle shall be taken to be the price which it would fetch on a sale made by a person selling it by retail in the open market in the United Kingdom at the time when the tax chargeable in respect thereof becomes due.…
Without any offence to the Government, may I say that here, for once, they have something which is clear? It is unusual for them to be so clear, and I say that without wishing in any way to be insulting or unkind. But then they get a bit mixed up again when we come to the words:
…on the assumption that the seller has suffered the incidence of tax at the basic rate and that the price includes the amount of such tax.

Mr. Gallacher: On a point of Order. Is it in Order for the hon. Member to read his speech?

Mr. Williams: I have only read extracts from something which we are being asked to pass. In my defence, lest it should be thought that I was contravening the rules of Order, may I point out to the hon. Gentleman that I do not follow the precedent of the Government Front Bench in this matter? Perhaps I can get a clear understanding of one part of this Amendment; I do not want to get the whole of it clear at once. That would be asking the Government for too much. I hope the Government will give a clear definition of what is the legal position under paragraph (b), and how it will affect us in everyday affairs. I would like some explanation on these points. If I can get it I will restrain myself from trying to explain this matter to my constituents. I do not know whether other hon. Members can explain the proposal and what it all means, but I would like to have a clear knowledge of it.

9.30 p.m.

Mr. Peake: There is a point of a rather simpler character than the matters raised by the hon. Member for Torquay (Mr. C. Williams), which is, I think, of some substance. This Schedule is intended to lay down rules for the assessment of the value of motor vehicles and to enable it to be decided whether or not the retail value is more than £1,280. Every one in the trade knows that at the present time a motor car has two values. The retail

prices are in fact fixed by the manufacturers, and the agents are bound to sell at the prices laid down by the manufacturers, but in order to prevent a purchaser from immediately selling a car again at black market prices substantially higher than the price fixed by the manufacturers, a covenant has to be entered into by the purchaser that he will not part with the vehicle within a period of 12 months. There is a fixed price by the manufacturer of, let us say, £800, but the value in a free market between buyer and seller of that car is substantially more—it may be £1,000. When we read the words of the Schedule, we see that the rules for ascertaining what is the value of a vehicle are as follow:
The retail value of a vehicle shall be taken to be the price which it would fetch on a sale made by a person selling it by retail in the open market in the United Kingdom at the time when the tax chargeable in respect thereof becomes due.
I want to know whether the value as ascertained under this Schedule will in fact be the same as the retail price fixed by the manufacturer and enforced on the retailer by him under arrangements made within the trade, or whether it will be the true value of the motor car as between a willing buyer and a willing seller, free from the restrictions of any covenant that can be imposed on the buyer by the seller at the time of the sale?

Mr. Glenvil Hall: I think that the answer to the right hon. Gentleman is that we must not read more into this than is intended. We are dealing here with ordinary car sales which go through the usual procedure that is, from the manufacturer to the man who runs the garage or the sale room and from him to the actual buyer. The paragraph to which the right hon. Gentleman has directed attention makes that clear. It lays down just how the retail value of the vehicle is to be ascertained. It is to be ascertained at the moment when it passes through the retailer to the actual person who buys the car and at the time when the tax chargeable in respect thereof becomes due. The tax usually becomes due at that time the vehicle leaves the factory and is taken by road or rail to the sale room and from there is driven away by the purchaser. Therefore, we see no difficulty either in the wording, or for those who have to find what the retail price is and what should be the value.
The hon. Member for Torquay (Mr. C. Williams) asked me one or two questions, but I am sure that he will not take it amiss if I say straight away that I am not sure that I followed all of them. I understood that he was anxious to know what was the open market price, as against the closed market price. I think he was anxious to learn the meaning of paragraph (2) and to distinguish between the open market price and the closed market or privilege price. The short answer is that the open market price is in effect the ordinary advertised price as distinct from a privileged price sometimes arranged when a subsidiary is selling, for example, to another firm within the same group. In that case they get special terms. Here in Part 2 of this Schedule we lay down the method and machinery to be followed. I think the hon. Gentleman also referred to paragraph 3 (b)if I took him up correctly, though as I said I had great difficulty in following what he was saying.

Mr. C. Williams: I would ask the right hon. Gentleman whether the provision he has just mentioned is entirely dealing with the sale of goods where there is a privilege price. As I understand it, what is meant by privilege price is where a person buys at a price lower than that at which the article is otherwise offered to the public, and what I want to know is, will he pay the tax on the lower price or on the price which he would have had to pay had there been no privilege.

Mr. Glenvil Hall: It is the market price for that type of vehicle. Frankly I do not think that the Committee should waste too much time on this. The prices of cars are well known. From time to time the motor car makers alter them as conditions demand and such alteration is well advertised in the Press. What we have to do here is devise a system to prevent the passing on of a car at anything less than the public market price at that time.

Lieut.-Colonel Dower: Plus tax.

Mr. Glenvil Hall: Yes I think that is understood and paragraph 3 (b)simply deals with the kind of manipulation which might take place if a car and its equipment are delivered not as part of the one transaction, where the car or part of it might be delivered at one time in order to keep below the limits set and the equipment or another part of it at another time.

This sub-paragraph helps to provide that the transaction shall be treated as a whole and that the car and equipment shall be treated as one car. I think with that explanation the Committee may now be willing for us to have this Schedule. I am not attempting to score a party point when I say that we have in essence already discussed this at great length this evening when we dealt with the Clause to which this Schedule is an addendum.

Mr. C. Williams: I thank the right hon. Gentleman for having explained paragraph (3) and I think it is quite obvious that I have done a service to the Government in this particular respect by getting information on this provision. It is well for us to know what the provision is endeavouring to do. There is a system whereby a car priced maybe at £1,000 might be sold a certain amount below the value, the buyer being willing to take a bit off—with the result that the gross amount of taxation is evaded. I think it is right that there should be something of this kind put in, but I should have thought that it would have been better had there been simpler words which stated exactly what is wanted, which is to avoid the sale of cars in different ways, planned for the purpose of avoiding taxation. I should have thought it would have been a good thing if it had been clearly put into the Bill. I am glad I raised this point because it does seem to me to be a matter on which it would be as well if we knew where we were. If it had been at a more convenient time, I should have asked quite a number of other questions on this Schedule, but I think that on the whole, having abstracted rather more than we usually do from the Government, I had better not be too ambitious in expecting to obtain any more for the time being.

Colonel Crosthwaite-Eyre: I should like to ask the Financial Secretary one question on paragraph (b.)As I read it the object is exactly what the right hon. Gentleman said, but I suggest that it does not meet the point at all. It would be perfectly possible for a car to be delivered with two speedometers but without a spare wheel and yet be considered a complete car. If one considers the wording between line 22 and line 28 one finds that if any part is missing a certain assumption is to be made. At the end


of line 28 it is stated that apart from any other part included it shall be presumed that the car is whole. I would ask the Government whether that construction is correct and, if not, what there is in this provision to show what in fact the Government mean by a whole car? Does it mean, perhaps, where one part is left out and two others inserted so that in the aggregate you have the same number of parts whether the car goes or not? If not, where is the provision in the paragraph to prove their case?

Mr. Glenvil Hall: I admit that the language may seem a little obscure, but that of course is common to most Acts of Parliament. I am advised that the phrase to which the hon. and gallant Gentleman now refers, covers equipment of a kind which is not normal on some cars—non-standard but nevertheless part of the equipment which frequently does go with the car or with a particular type of car. Here it is sought to see that the full equipment which is reasonable to a car is there and is taken as part of one transaction, even though it does not come in the same importation or at the same time on the same sale.

Colonel Crosthwaite-Eyre: I asked the Financial Secretary a specific question. After line 28 the assumption is not clear and I asked the right hon. Gentleman what connecting link there was to ensure that the part up to line 28 would be taken into consideration with the part after line 28. I should like an answer to that question.

Mr. C. Williams: I was absolutely fascinated by the last explanation from the right hon. Gentleman. It savoured very much of Alice in Wonderland. I would very much like to know precisely what is his definition of equipment which is not normal in a car. Is a speedometer normal or not? I should have thought that it might be normal. I believe that some cars have little poles on them for wireless. Is that normal or not normal? I do think we ought to be told precisely where we are on this matter. Are we allowing these cars to go out with the ordinary equipment for running—that is to say, speedometers and things of that kind, and spare parts?

If so, that is all to the good, but we ought to know what the Financial Secretary visualises, and what the imagination of the Treasury thinks might be put on a car to incur this penalty.
9.45 p.m.
I hope the Committee will be permitted to have this knowledge. Otherwise a car owner may have something on his car which will incur the penalty unwittingly. No one wants to have that kind of offence made possible. Any hon. Lady opposite might have a fancy for this or that on a car, something which is not normal. Suppose a driver took a vacuum flask to enable him to have a hot meal during the journey. Would that come within this definition? It would not be a new idea, but I know that anything which is new is anathema to the Government.

Sir Arnold Gridley: I should like to put a point to the Committee which has not been put before, and in which I think there is some substance. [Laughter.]Hon. Members may laugh but I am not making any reflection upon any other hon. Member. It is not an uncommon practice for an industrial organisation to buy a large number of cars, say 20 or 30, at such and such a sum, and to arrange for those cars to be replaced subsequently year after year by new cars for a fixed sum. Therefore there is renewal by new cars but no actual payment for those cars within the meaning of the Schedule. I am a little in doubt how an arrangement of that kind would be dealt with, and I should like some light on this point.

Mr. C. Williams: I support the point that my hon. Friend has just put, and press that we may have an answer to it. I did not expect the Government to give an answer to my question but I think we ought to have the courtesy of an answer to the question of my hon. Friend. [HON. MEMBERS:" Answer."]

Amendment agreed to.

Schedule, as amended, agreed to.

Bill reported, with Amendments.

As amended (in Committee and on recommittal), considered.

Orders of the Day — NEW CLAUSE.—(Relief for pensioners in respect of increase in tobacco duty.)

(i) The Treasury may by regulations provide—

(a) for mitigating, in the case of pensioners satisfying the conditions of the regulations (whether as to age, class of pension or otherwise), the effect of the increase in the retail price of tobacco occasioned by the duties imposed by this Act;
(b) for making up, out of sums received by the Commissioners of Customs and Excise on account of customs duties, the deficiency in the price received by persons supplying pensioners with tobacco in pursuance of the regulations.

(2) Regulations under this Section may contain incidental and supplementary provisions and may in particular provide—

(a) for preventing abuses of the provisions thereby made or of documents or tokens issued for the purposes thereof;
(b) for the issue of tokens through the Post Office, and for applying, with the necessary adaptations, as respects tokens all or any of the provisions (including penal provisions) of the Stamp Duties Management Act, 1891, Section nine of the Stamp Act, 1891, and Section sixty-five of the Post Office Act, 1908;
(c) without prejudice to the last preceding paragraph, for the imposition of penalties (including customs penalties) in respect of any contravention of or failure to comply with the regulations, so, however, that no person shall by virtue of this paragraph be punishable otherwise than on summary conviction or be liable for any offence to imprisonment for a term exceeding three months or to a fine exceeding one hundred pounds.

(3) Stamp duty shall not be chargeable on any receipt given to the Commissioners of Customs and Excise for money paid by virtue of paragraph (6) of Subsection (1) of this Section.

(4) All regulations under this section shall be laid before the Commons House of Parliament immediately after they are made and if that House within the period of forty days beginning with the day on which any such regulations are laid before it resolves that the regulations be annulled they shall thereupon become void, without prejudice, however, to the validity of anything previously done thereunder or to the making of new regulations.

In reckoning any such period of forty days as aforesaid no account shall be taken of any time during which Parliament is dissolved or prorogued or during which that House is adjourned for more than four days.

(5) Notwithstanding anything in subsection (4) of Section one of the Rules Publication Act, 1893, regulations made under this section shall not be deemed to be statutory rules to which that section applies.

(6) In this section the expression "pensioner" means a person to whom a pension has been awarded under the Old Age Pensions Act, 1936, the Widows', Orphans' and Old Age Contributory Pensions Act,

1936, the National Insurance Act, 1946, or any corresponding enactment for the time being in force in Northern Ireland and the reference to the Stamp Duties Management Act, 1891, includes a reference to those portions thereof repealed (save as to Scotland) by the Forgery Act, 1913.

(7) If any Act increasing the duties of customs on tobacco imported into the Isle of Man makes provision similar to the provision made by this section, regulations under this section may give effect to any arrangements made between the Treasury and the appropriate authority in the Isle of Man for coordinating any systems of relief established respectively under this section and under the said Act so as to secure that they operate, to such extent as may be provided by the arrangements, as a single system.

(8) In the application of this section to Northern Ireland, any reference in paragraph (6) of subsection (2) thereof to any Act shall, so far as that Act continues in force in Northern Ireland, be taken as referring to it as it applies there.—[Mr. Dalton.]

Brought up, and read the First time.

Mr. Dalton: I beg to move, "That the Clause be read a Second time."
At last I am going to seek to make provision, with the consent of the House, for some old people to have a smoke. In consequence of the discussion which took place on the Second Reading of the Bill and before that, upon the Budget Resolution, I gave an undertaking to study whether we could devise some administrative arrangement to enable certain defined classes, particularly old age pensioners, to get a limited quantity of tobacco at pre-Budget prices. The arrangement would necessarily be of a novel kind because this attempt, in this form, has never been made before. The class of person must be clearly defined, if the arrangement is to be properly administered. I undertook to study that question and it has been studied. The matter has presented a good many complications of detail, but finally I am moving the new Clause on the Order Paper. I propose to speak about it in general terms. Hon. Members may well wish to raise points of detail on it. My right hon. Friend the Minister of National Insurance, who has been very closely associated with me in preparing these arrangements—I am very grateful to him for his assistance—will be able to indicate in some detail the way in which the administrative arrangements for the groups of people concerned, with most of whom he is already dealing in another capacity, in regard to their pensions and so on, will work.
I begin by repeating that this is a novel administrative arrangement. It is not to be regarded as a precedent. It is wholly exceptional. It is a response, I believe, to a widely felt desire, which was expressed in many parts of the Committee, that some special arrangement should be made for the benefit of the old people in this regard. It is not the kind of thing which we can give any undertaking to repeat in any other case or in regard to any other Tax. But in regard to the Tobacco Tax we have thought it right to put forward these proposals. It is also very necessary that the classes of persons to be benefited should be most clearly defined. As I have already found this afternoon and on previous occasions, whenever proposals are made to benefit any section of the people, the first reactions are proposals further to extend the groups to be included. I must warn the House that it will be necessary in this case, as in others, to resist proposals for extension. Otherwise the whole thing becomes both inconveniently large and administratively unworkable.
Having said that by way of preliminary observation, let me go on to say that the intention of this Clause is to give the Treasury power to make regulations governing these matters. Although this is not in the Clause and although the regulations will have to be laid before Parliament and will be subject to discussion here, I think it will be convenient if I indicate at this stage some of the details which it is intended to embody in the regulations. It is intended to provide that old people, as defined in the regulations, will be entitled to obtain two ounces of tobacco a week, or an equivalent quantity of cigarettes, at prices as they prevailed before the increase made in the Finance Bill—at pre-Budget prices. That will be the proposal.
In order to obtain the advantage of these arrangements, it will be necessary for the persons concerned to sign a declaration that they are habitual smokers. That is very necessary. As we all know, among the general body of old age pensioners—there is no sex discrimination but it is a well known fact— some of the old people do not smoke. That being so—and it is an understatement of what is commonly known—it would clearly be an abuse of our intention merely to furnish tobacco for people

who do not smoke—the pensioner may be an old lady or an old gentleman who never has smoked—which would be smoked by persons other than the intended beneficiaries. It is required, therefore, that they shall sign a declaration and have it certified in the same way as claims for contributory pensions. That will be a necessary condition. I am taking it for granted that people will play the game over this and that it will not be turned into a racket, and in particular—it was desired that this should be done on behalf of the older people— that the younger people will honestly recognise that these "smokes" are not for them. They are for the old people. There will be penalties for trafficking in this way.
I ought to explain that the administrative advice following the declaration will be that the person who signs the necessary declaration will then be entitled to claim a number of tokens, which will be exchangeable at the tobacconist's shop for tobacco at the lower price which, in due course, will be recovered, by the tobacconist, by presenting the tokens to the Revenue authorities. That side of the administration is not difficult, but we hope to make sure that the whole matter will be done in the right atmosphere. If this is subject to grave abuses, the whole thing will have to be reconsidered. It is all experimental and it must be dependent on a general level of honesty and straight dealing. If it should be widely abused, then I must reserve the right to withdraw any concessions herein made, though it is my hope and belief that people will play the game, and that it will not be necessary.
With regard to the cost involved in this, the estimate must depend upon what proportion of the persons entitled, make the claim. Roughly speaking, I would estimate that in a full year I shall lose through this a net cost to the Revenue of between £3 million and £4million, and in this current financial year it will be approximately half that amount.

Lieut.-Colonel Dower: Can the Chancellor give any indication as to when the regulations are likely to be made? Will the benefits start immediately?

Mr. Dalton: I will deal with that point before I sit down. The greater detail I will leave to my right hon. Friend, but


I want to lay down the principle that these benefits are not designed for people who are still earning wages; they are designed for the old age pensioner who is now beyond the wage-earning age. Therefore persons who have not retired from work will not be eligible under this scheme, nor will other groups of people, with whom we feel considerable sympathy but who could not be included within this scheme without extending the thing unduly.
The key to the administration of this scheme is the Post Office, and the identification of the persons concerned will be made through familar books, such as pension books and the like, presented at post offices. With regard to the date when we can bring the scheme into operation, that is dependent upon various factors. I would like not to delay if the House accepts the Clause and it is embodied in the Finance Bill. We shall go ahead with the completion of all the necessary formalities, and considerable steps have already been taken by way of preparation. Although I cannot give a fixed date, I can certainly say there will be no delay beyond what is necessary for the printing of forms and other arrangements. The sooner we can get it into operation the happier indeed shall I be.
This is, as I have said, an experiment and I hope we shall find that it works well. It is my hope and strong desire that it shall be found to work well, because I believe that this proposal is a response to wishes widely expressed throughout many sections of the community. Indeed, when I was first dealing with this matter, not only did hon. Friends of mine on this side of the House press for something of this kind to be done but the hon. Member for Moseley (Sir P. Hannon) also added his claim to the claims made in other parts of the Committee. This, therefore, is the measure of the cost of the scheme to the Exchequer, that we shall have to pay in a full year about £3 million to £4million, or, rather that we shall get less Revenue to that extent, and we believe there will be benefits to a substantial number of old age pensioners. The details I will not develop now but such is the intention lying behind this Clause.

Sir P. Hannon: Sir P. Hannon rose—

Mr. Dalton: May I just finish, and then I shall be happy to give way. I hope we may get this without unduly prolonged Debate. I think the general purpose is one which will be widely acceptable throughout the House, the regulations will be published and laid in due course, and comment can be made upon them. I am anxious to get this thing working. I have sought with my advisers to get a workable scheme. At one stage we were very much impressed, as it was inevitable we should be, by the difficulties and complexities of the matter, but I think we shall find means of overcoming them.

10.0 p.m.

Sir P. Hannon: My question is this. In making this concession to the old age pensioners, the right hon. Gentleman is throwing an additional burden on the Post Office. I happen to be on the Advisory Council of the Post Office, and I am anxious that as far as possible people administering postal services shall be treated fairly. Will any consideration be given to the postal servants throughout the country on whom this extra burden is put?

Mr. Dalton: This matter has been discussed, and my right hon. Friend has been in consultation with the Postmaster-General on it. We will do everything possible to see that no further burdens are placed on the staffs. But this illustrates the point, which has often been made, that when this House takes decisions involving new administrative work, it is inevitable that some addition to staff may be needed. This is a case where it may be necessary to increase the staff, although I hope only to a very small extent.

Sir P. Hannon: I thank the right hon. Gentleman.

Captain Crookshank: We are very willing, of course, that this Clause should be read a Second time. We recognise that this is not the appropriate moment to go into all the details, because this is only am enabling Clause, and therefore, should it be necessary, we can discuss the details when the regulations are laid. The whole procedure outlined here is something entirely novel, and for that reason it is worth the House pausing for a moment. The right hon. Gentleman has quite clearly said that this is not to be taken


as a precedent for anything else. On first hazarding a guess, it is very difficult to see how that could be done, because it would be very difficult to work in other highly taxed commodities.

Mr. Dalton: Alcoholic liquors.

Captain Crook shank: I am not suggesting alcoholic liquors; the right hon. Gentleman does that.' But this is something entirely new, and it has been the subject of discussion throughout Debates since the Budget was opened. I think there will be difficulties and the right hon. Gentleman realises that. I am glad that he has taken the point made by my hon. Friend the Member for Moseley (Sir P. Hannon) that this will put a burden on the Post Office. That is a serious matter in view of the already congested nature of the business at Post Office counters today. This is a different section of the staff from that whose problems we were debating last week on the Post Office Estimates. Then it was a matter of postmen and distribution. Here we are concerned with another lot of people who will be engaged in the handling of tokens, if they are to be handled through the Post Office. That may not be the case; we will wait and see.
There is a question about which there must be considerable care. The right hon. Gentleman told us that he is going to limit this to people who actually smoke, and there are not only to be sanctions against trafficking in tokens—I do not know why "tokens" has come in as a new word, and why they could not be called coupons—but they are to be-limited to those who smoke habitually. A declaration has to be made that the old man or woman have smoked habitually. What does "habitually" mean? In this connection it may be a matter of some considerable importance, and I hope that the right hon. Gentleman will tell us about it some time.
There is another matter of very considerable importance which we should get right this very moment; otherwise it may cause disappointment. As I understood the Chancellor, this concession is to be made to pensioners and pensioners only, and not to what are loosely called old people; that they are to be those who have definitely retired, that age has nothing to do with it, that they are those who are within the general ambit of the

Pensions Acts, which are now different from what they were, that they have definitely retired. If I am right, it is important that he and other Ministers who are concerned should make this abundantly clear, otherwise there may well be disappointment.

Mr. Dalton: I did make it clear.

Captain Crookshank: I agree that the Chancellor could not have made it any clearer today, but I notice that the clarity of Government pronouncements is in inverse ratio to the distance at which they are made from the Front Bench. Government statements may be clear, but by the time some of their supporters outside rehash them they are anything but lucid. If it is quite clear, as the Chancellor has said, that it is not a question of being old, but of being retired and a pensioner which is the test to be applied, it is better that it should always be made perfectly clear; otherwise many people will be disappointed. I am merely asked what the Chancellor said he made perfectly clear from the beginning. We are very pleased, at any rate, that in this matter he has listened to the advice he received on this subject from all quarters of the House.

Mr. Shurmer: There have been many rumours about the concession to be made to old age pensioners. Now, in the morning, old age pensioners will be able to read that the Chancellor has at last announced that he is to let them have some tobacco and cigarettes at pre-Budget prices. I hope that the Chancellor will try some time to get this concession into operation as quickly as possible. For a number of weeks these old age pensioners have been suffering because of the money they have had to spend to buy cigarettes and tobacco at the new prices.
A point which has been raised by the right hon. and gallant Member for Gainsborough (Captain Crookshank) has also flashed through my mind. There are a number of people in this country who are not contributory pensioners and who are not entitled to a non-contributory pension, who receive a small sum of money or have a small banking account; they have not much more income than they would have had were they receiving a non-contributory pension—a matter of a couple of shillings a week takes them out of the non-contri-


butory pension class. They are old people and will feel the burden quite as much as the old age pensioner. I do not want to develop my argument, but no doubt the Chancellor will look into that matter—at least I hope he will—of the people who are just outside the scope of the non-contributory pension. By way of illustration, they may be getting an income of £3 a week, whereas they would be getting 42s. if they were contributory pensioners. I hope that the Chancellor will take into consideration these old people, who are not receiving either a contributory or non-contributory pension.

Mr. Butcher: I think any observations one would wish to make would be more suitably offered when the regulations are laid before the House. I would ask whoever is to reply to this Debate to say whether it might not be possible to have those regulations brought before the House in such a way that not only are they capable of annulment by the House but are also capable of amendment, because in matters of this kind this House can really assist his Majesty's Government in framing the regulations in a way which will bear happily and to the advantage of the people whom the Chancellor desires to help.
As I listened to the Chancellor developing his remarks I felt that while he had honoured his pledge to examine the matter in response to pleas from all quarters of the House, we were introducing the greatest possible discrimination amongst the old people. I thought that it was the desire of the House that all old people should participate. Now apparently there is to be some discrimination. The concession is not to be granted merely to persons drawing pensions. That is not the only limitation. In addition, they must sign a declaration that they are habitual smokers and must have ceased work to qualify. That is something far less generous than the House desired. Therefore, I ask the Minister of National Insurance whether he can give an assurance that the regulations will be brought forward in such a way that they may be capable of amendment by the House.

Lieut.-Commander Braithwaite: I think the hon. Member for Sparkbrook (Mr. Shurmer) and my hon. Friend the Member for Holland with Boston (Mr. Butcher) have raised a point of very con-

siderable substance in regard to exactly how this concession is to operate. I hope that the Chancellor will pay due regard to what they have said. At the same time, I am sure that hon. Members in all parts of the House are universally pleased to see this new Clause on the Order Paper. To my mind, it is not so much worthy of remark that this burden is now being lifted from the backs of the old age pensioners as that it was ever imposed. It seems to me a most astonishing thing that these difficulties were not foreseen before the tobacco tax was increased at Budget time. I understand that the right hon. Gentleman the Minister of National Insurance has now taken charge of this Debate. We have been told that he was consulted at all stages when these concessions were being arranged. I would like to ask him whether he was consulted before the tax was imposed. I cannot imagine the right hon. Gentleman acquiescing in this very ham-fisted arrangement which was introduced in April.
It has taken three months to reach this stage. During the whole of that time the old age pensioners have been paying the increased tobacco tax. It is extraordinary that this cart before the horse procedure—if I may be allowed to use the phrase which I used on a previous occasion—is being employed in this regard. I am reminded of an epitaph in a churchyard on the tombstone of a three months' old baby. It ran something like this:
If I was so soon to be done for, I wonder what I was begun for
I think that that applies to this tobacco tax placed upon the old age pensioners. I would like to ask the Minister of National Insurance whether he was consulted on this matter before the Budget was introduced. Once again the Government have had to retreat. Once again an alteration has had to be made. For my part, I am quite confident that the old age pensioner will play the game in this matter. After all, as many hon. Members will recall, we had a very similar arrangement during the war by which Service men were able to obtain cigarettes at pre-1941 Budget prices. Is it suggested that that was generally abused by the Service men? It is no good muttering about it. Is that suggested by hon. Members opposite? At least, it is not suggested, I see, on the Front


Bench where the responsible gentlemen sit.
10.15 p.m.
Then there may have been, and probably were, certain cases where that privilege was abused. There will probably be certain cases where this may be abused by the old age pensioners, but I am saying that, by and large, this concession will be respected in the same way as was the Services concession. [Interruption.]Well, if it is really to go out from this House that those who fought and won the war did that sort of thing, let it go out, but I am not one of those who take that view.
There is a lesson to be drawn from this. This is a victory for the private Member of the House of Commons, for private Members who sit on all benches in this House. It is an example of what can be done by Debate in this House, and it arises from a Debate which took place on the Report stage of the Budget Resolutions, which the Government are proposing to eliminate next year. I hope they will be wise enough to draw the moral from it that the Report stage of the Budget Resolutions does bring to light this sort of anomaly, and that, if it had not been done, we should not have got this concession now but might have had to wait another month or so. I am glad that it has been done, and that the Government have made yet another retreat from another foolish piece of legislation.

Mr. Edward Evans: The hon. Member for Lonsdale (Sir I. Fraser) and I put down an Amendment calling attention to the position of blind persons—

Mr. Speaker: I must interrupt the hon. Gentleman straight away to say that I was not proposing to call that Amendment, because I understood that the point was already covered in the Bill.

Mr. Evans: If I could have the assurance that they were covered by the Bill—

Mr. Speaker: All I can say is that I consulted the draftsmen this morning about that Amendment, and I was not intending to call it, because I understand that those people are already covered.

Lieut.-Colonel Sir Walter Smiles: May I ask your guidance on one point, Mr. Speaker? There is an Amendment on the Order Paper in my name to include ex-Service men and women in hospitals who are in receipt of disability pensions. May I ask you if it would be in Order for me to speak on this topic in the general Debate, and perhaps, if you were to call the Amendment later on, it might be moved formally without a speech?

Mr. Speaker: I might suggest that it would be in Order to discuss it, if it was going to be called. The hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) has an Amendment on the Order Paper, and I thought that the hon. and gallant Gentleman might speak on that Amendment, and, if necessary, I will call it for decision afterwards.

Mr. Jennings: I would like to ask the Minister if he would tell us, in regard to this figure of three million, which is the Chancellor's figure, what calculation concerning the number of smokers among the old aged pensioners he has made, and what is the basis of that calculation, since he must have had some figure in mind. If it is calculated upon a small basis, then the figure of three million is unlikely to carry out the wishes of hon. Members on both sides of the House. We may find that, if the proportion upon which the figure is calculated is small, a number of people will be disappointed. I would like to reinforce the plea which has been made on behalf of all old people, whether pensioners or not. There are old people not in receipt of pensions who need a concession of this nature, and who can ill afford to pay in the same way as old people who are drawing pensions. I support the plea that the Minister should give full and sympathetic consideration to all old people who are now faced with the increased duty, so that we shall not make fish of one and flesh of another.

Mr. Carmichael: There are a number of people chargeable to local authorities, and, in my view, the word "pensioner" would exclude them from the benefits provided by this new Clause, notwithstanding that the scales laid down by many local authorities bear comparison with the amount received by old age pensioners.


I know from considerable experience that the allowance such people are granted is no greater than the allowance given to old age pensioners. But under this scheme they would be excluded. In the City of Glasgow there are many people who were in a small way of business, and who, at an appropriate age, and when they could not carry on any longer, gave up their business, and finally found themselves on what used to be called "the parish," and is now known as the Welfare Department. I ask the Minister not to have the word "pensioner" too rigidly applied. I do not think that a case can be made out for bringing in all people of a certain age, because that would destroy the purpose of these provisions; but I do think that if people are chargeable to the local authorities and are receiving a weekly allowance which is, very largely, on a par with the allowance paid to old age pensioners by the national Exchequer, they are on all fours with such old age pensioners with regard to income. I would like that point to be taken into account when regulations are being made, so that local people can be included along with the national pensioners.

Sir P. Hannon: I would like to say at once how grateful I am to the Chancellor of the Exchequer for the concession he has made. I agree with the hon. Member lot Bridgeton (Mr. Carmichael) that there are other categories of people in this country to whom consideration should be extended in regard to the concession being made under this new Clause. I am particularly happy that this concession has been made, because it affects a great number of people who have been very unhappy for many weeks past because they could not get their smokes as before. Knowing the quality and character of the Minister of National Insurance, I am confident that this new phase in our social policy will be administered to the benefit of all concerned, and, if it all possible, to the benefit of those old people who are at present excluded from this concession.

The Minister of National Insurance (Mr. James Griffiths): In the discussion on the Budget, my right hon. Friend the Chancellor of the Exchequer promised that he would, with his colleagues, look to see whether it was possible to devise some scheme by which old age pensioners—to use the general term which I believe was

used in our discussion—who are dependent upon their pensions, could be relieved of this taxation. I have done my best, with him and with our advisers, and we have worked very hard indeed to try to find ways and means of making a concession. We aimed at a system of administration that would, first of all, be simple. Hon. Members will appreciate that unless such a system is simple, it will take a long time to put it into operation. Secondly, we had to devise a system with safeguards against abuse.
We have worked out a system which we think is reasonably simple, which can be brought into operation in a reasonably short time, and which, in the main, is fair to everybody concerned. We considered several alternative methods and instruments through which this new concession could be administered. Finally, we came to the conclusion that the Post Office was the best instrument to be used. I am indeed very conscious of the point made by the hon. Member opposite concerning the burden carried by the Post Office. May I take this opportunity of saying that the people of this country owe a deep debt of gratitude to this great national institution for the services it renders. The main burden of the concession will fall on the Post Office.
As my right hon. Friend the Chancellor has explained, the precise categories of the pensioners to benefit will be defined in regulations, and there will therefore be an opportunity of discussing the matter again. However, I think I ought to say now that it is intended that the concession shall apply, first, to all non-contributory pensioners, including blind pensioners from 40 years of age. The non-contributory pensioners come first, and if they are blind they qualify at 40 years of age; the others qualify at 70 years of age. Therefore, if a person has qualified for a non-contributory pension he or she will be entitled to this concession. Hon. Members in all parts of the House know that when we introduced the increased contributory pensions last October we also increased the non-contributory pensions to the new maximum. We shall therefore bring within the concession all the non-contributory pensioners over 70, upon whom this tax would bear hardest.

Mr. Fairhurst: Will this apply to old Army pensioners, because I understand there are a considerable num-


ber of old Army pensioners who are in this difficulty?

Mr. Griffiths: At present I am explaining which classes will qualify. First of all, the non-contributory pensioner who gets a pension on a book which is easily identifiable. Everybody getting a non-contributory pension qualifies. Secondly, there are contributory pensioners, who are paid pensions at 65 and over in the case of men, and at 60 and over in the case of women. This concession will also be made to them at those ages, subject to retirement. We have our own test of retirement under the new scheme of insurance. Men of 65 and women of 60 who retire are entitled to a pension at the increased rate. Therefore, men between 65 and 70, and women between 60 and 65, will qualify if they have retired within the meaning of the National Insurance Act, and have qualified for the increased pension. Let me say a few words about that aspect. The National Insurance Act lays it down that the increased pension is only payable to men between 65 and 70, and to women between 60 and 65 if they retire. But when a man reaches 70 years of age and when a woman reaches 65 years of age the increased pension is payable without satisfaction of the retirement condition, because at those ages they are deemed to have retired. The concession will be made, therefore, to those who have retired within the meaning of the National Insurance Act, as well as to all non-contributory pensioners, including blind pensioners at 40 years of age.

Sir P. Hannon: Does "retirement" mean that the person entitled to a pension has no earning capacity?

Mr. Griffiths: No. I think it is known perfectly well that "retirement" is defined in the National Insurance Act. When the Department are satisfied that a pensioner has retired, a pension at the increased rate is awarded. That will be the simple test adopted for this purpose.

Mr. S. Silverman: I think what is troubling some hon. Members is that the retirement test under the Act is not a test of full retirement.

Mr. Griffiths: No.

Mr. Silverman: That is to say, old people still enjoy a pension if they work part of the time, provided their earned

income falls below a certain figure. Those people will still be pensionable.

Mr. Griffiths: There is a provision by which people who have retired and who qualify for the increased pension, can work part-time and earn up to a certain amount. It is estimated that the number of persons to whom the relief will be available if they are users of tobacco will be about 3,750,000 at the commencement of the scheme, then every week thereafter—and this is a problem with which I am dealing—some 10,000 new pensioners will qualify for relief. That means that we begin with 3,750,000, and about 10,000 pensioners become newly qualified each week.

Captain Crookshank: Surely the right hon. Gentleman does not mean "qualified"? He means "within the field of possible smokers," because the test is whether the person is an habitual smoker.

10.30 p.m.

Mr. Griffiths: First of all, I have described the number of people who would be entitled to apply for the concession if they qualify in other ways. The number of pensioners in the field will be 3,750,000 when the scheme commences, and each week there will be 10,000 persons, who, as they become pensioners within the meaning of the Act, will qualify for the concession. This, of course, is a very big administrative job and, as I have said, we have done our best to find a simple method of doing it.
Let me describe exactly what the pensioner will have to do. The pensioner will first get a form of application at the Post Office on which to declare that he or she is an old age or widow pensioner in the class entitled to the relief, and that he or she is a habitual user of tobacco or snuff. In addition to declaring that they are habitual users of tobacco or snuff, they will also make a declaration that they will use the tokens for the purchase of tobacco or snuff for their own personal use. The application form will have to be certified by an authorised person to whom the pensioner is known who will vouch for the accuracy of the declaration. When the form is completed, the pensioner will take it back to the Post Office with his current pension book which will be inspected by the counter clerk, and, if the application is in order, a book of 48 dated tokens will be supplied. Each


token will be valid for three months from the date stamped upon it, but will not be available for use before the date. Where, in a case of infirmity, an agent appears on behalf of the pensioner, the agent will be able to obtain the book of tokens on the pensioner's behalf on presentation of the completed form and the pensioner's order book.
May I here deal with the class of person mentioned by the hon. Member for Bridge-ton (Mr. Carmichael)? They are a class with which I am particularly concerned. For the pensioners who are in institutions special arrangements will have to be made, and those are now under consideration by the Minister of Health. There are also the persons who become eligible after the scheme is in operation. For them a slightly different arrangement will be applied. The books will contain tokens dated from the start of the scheme, and some of these tokens will have to be taken out as new pensioners become eligible for the relief at a later date. The Post Office did not feel —and we quite appreciate their point of view—that they could be responsible for this particular job which will be handled centrally from a central point. The book of tokens will contain all the necessary instructions, but it might not be out of place if I tell the House now how they will be used. Each token has a cash value of 2S. and all the pensioner will have to do is to present his token when purchasing tobacco or snuff from a licensed dealer and the cost to him will be reduced by the value of the token.
The size of the field to be covered is a very big one. These things look very simple, but it is an immense field and the Chancellor of the Exchequer has said that we cannot give any specific date when the scheme will come into operation; but we are working very hard on it and we have done our best to find a simple administration to cover it in the best way. I hope that the House will agree that the Chancellor of the Exchequer and I and all concerned have made a real effort to find a workable scheme.

Mr. S. Silverman: I am sure the House would like it to be said that, having heard this explanation, we thank the Government for having made this concession and for having presented it in a workman-like way. We hope that it will become operative as quickly as possible, and I am sure

that we all would like to say how much we appreciate it.

Mr. Gallacher: I want to put a question to the Minister. The Minister may be aware that I made some suggestions in connection with this scheme. The question I wish to raise is about the position of those between 65 and 70 years of age who are not in the contributory scheme, and who are dependent upon welfare or on parish relief. Is it not possible for the local authorities to give the concession for old age pensioners to those who are dependent upon welfare or parish relief?

Mr. J. Griffiths: That particular group of pensioners who are in institutions are a special problem, and will be until such time as we bring the new insurance scheme into operation. In the meantime, the Minister of Health is giving consideration as to how they can be brought in.

Mr. Carmichael: I think the right hon. Gentleman is missing the point. There are two classes under the protection of the local authority—there are those who are in institutions, and those who are living in their own homes but are unable to draw pension because they are not contributors and have not reached the age of 70. They are on the roll, and they draw their money weekly, or, as the scheme may be according to the district. They draw their money regularly from the local authority. Their position is precisely the same as that of the old age pensioner, but they get their cash from the local authority instead of from the Post Office. I am not suggesting that I have any idea on how they should be incorporated into the scheme, but I feel that they should be considered for incorporation in the scheme. otherwise they are being penalised.

Mr. Hollis: I would like to reinforce the point put by the right hon. and gallant Member for Gainsborough (Captain Crookshank). That was, that there should be some sort of definition of "habitual." That must be made clear. Suppose I am an old age pensioner: I honestly do not know whether I am a habitual smoker or not. I may buy a packet of cigarettes once in three weeks when I am entertaining guests, and I may myself smoke one or two. I do not know whether I could consider myself a habitual smoker. I do not think we want to have any risk of


people getting into trouble and being accused of making false claims through this. We must have some sort of idea what is meant by the word "habitual."

Mr. J. Griffiths: My own view is that it would be futile to try to define "habitual." I think those who smoke regularly could be described as habitual smokers. They can make application and their applications will be signed by an authorised person. I think it is far better to leave it in that way.

Mr. Hollis: Mr. Hollis rose—

Mr. Speaker: The hon. Member has already exhausted the right to speak. He has spoken once and he cannot speak twice.

Clause read a Second time.

Lieut.-Colonel Lipton: I beg to move, as an Amendment to the proposed Clause, in line 42, after"1936,"to insert:
including persons excepted under paragraph (e)of subsection (1) of section twelve of that Act.
I think that in this I will have the support of many other hon. Members who represent London constituencies. The effect of this Amendment will be to add to the 3¼ million and the 10,000 a week who will become eligible under the Clause as it stands, roughly about 1,200 pensioners who are covered by a special scheme which obtains in the South Metropolitan Gas Company. The employees of this company have been excepted from the operation of the 1936 Act by virtue of certificates given by the Minister of Health under paragraph (e)of Subsection (1) of Section 12 of that Act. I am asking my right hon. Friend to enlarge the definition of "pensioner" so as that it will include these 1,200 pensioners. The condition of exception was that provision was made by means of a superannuation fund approved by the Minister to secure to them benefits no less favourable than those provided in the 1936 Act. The employees concerned are also excepted from the operations of the National Health and Unemployment Insurance Acts. The scheme is covered by the Statutory Undertakers (Total Exception) Regulations, 1939. It is the only one to which these regulations apply. That fact is borne out

by the explanatory note which appears in the amendment to these Regulations which was promulgated in the Statutory Rule and Order 2224 of 1946.
The superannuation allowances under the company's scheme are substantially higher than the old age pension of 10s. a week payable by the State up to October, 1946. The employees of this company receive a pension for 41 years' service in the lower grade of 42s. 6d. per week for a man and 10s. for his wife. However, if the thing is analysed—and I believe my right hon. Friend. has been provided with all the relevant information on this matter and he has had the opportunity of discussing the matter with me which will reduce my remarks to a great extent than would otherwise be the case—it will be found that out of the 1,208 pensioners covered by the special provisions of the South Metropolitan Gas Company, nearly 800 are entitled to pensions less than are being drawn by contributory or non-contributory pensioners as defined under the Act.
The Company's pensioners have not been allowed to share in the assistance given to other pensioners out of general taxation, though they themselves are taxpayers, in the following respects—they are not entitled to claim supplementary pensions through the Assistance Board under the Old Age and Widows Pensions Act, 1940, though strong representations were made to the Chancellor of the Exchequer when the Bill was before Parliament. In October, 1946, the State pensions were increased from 10s. to 26s. a week though these pensioners had paid nothing whatever towards the cost of the increase. Again our pensioners were excluded from this scheme. It is now proposed to exclude our pensioners from the concession of obtaining tobacco at pre-Budget prices. I hope it will be possible for my right hon. Friend to find it possible to accept this Amendment which, as I have said, cannot have any effect other than to add 1,200 pensioners to the existing three and a quarter million pensioners.

Mr. Cecil Manning: I beg to second the Amendment.

Sir W. Smiles: Perhaps I may, with your permission, Mr. Speaker, and for the convenience of the House move the Amendment standing in my name.

Mr. Speaker: The hon. and gallant Member cannot move the Amendment at this stage.

10.45 p.m.

Sir W. Smiles: The Amendment will be moved later, and when I move it, it will be in the following terms: in line 43, after "1946," insert:
and ex-service men and women in hospital who are in receipt of a disability pension.
Since the Tobacco Duty was raised I have had a great many letters on the subject, as I am sure have other hon. Members. These letters have been mostly from ladies who have never written to me before. These ladies represent the various associations which since 1918 have been calling every week at the various hospitals and sanitoria all over the country to supply cigarettes and other amenities to the disabled ex-Service men and women in hospitals. They have done this labour of love over some thirty years, and they have only written to me, their M.P., since this Tobacco Duty was raised. It would be very difficult indeed for them to continue to provide these cheap cigarettes, which are all supplied by charitable contributions, to these men and women in the hospitals. The disabled ex-Service man in hospital who has been lying there, it may be 30 years or so, will not, when he reaches the age of 65 or 70, get any increase. He will not be in receipt of an old age pension, whereas other people who have been more fortunate all this time in having the full use of their limbs will have the advantage of cheaper tobacco. These ex-Service men and women of the same age, will not have that same relief
Among the letters I have received was one which complimented the Minister of Fuel and Power. It is very rare indeed to get any compliments written to an M.P. for the Minister of Fuel and Power, but my right hon. Friend did supply coupons for petrol to take these disabled ex-Service men and women for drives to get them out of the hospitals for a change. These associations exist all over the country in England, Scotland, Wales and Northern Ireland such as the Not For-gotten Associations, and women's branches of the British Legion.
I have looked up the number of 100 per cent. disabled ex-Service men and women. There were two Questions put down on that subject on 28th and 30th

April of this year, and the number of these unfortunate men and women was given as 50,000. Not all of them are in hospital, I admit, but I think as a rough idea we might take the number as 50,000. If you made these people an allowance of, say, £2 or £3 it will come to £100,000 or £150,000. It is always well to over-estimate in these cases. At any rate, at the very most, it would be a quarter of a million against the £3⅔millions which the Chancellor of the Exchequer mentioned as the relief for the old age pensioner. It is a debt of honour this House owes to these people who have spent their lives in pain and misery. Tobacco is really the only alleviation and solace they have.
When the Minister replies, I hope he will make it clear that these disabled ex-Service men and women in hospital, when they reach the age of 65 or 70, will receive equal benefits with their brothers and sisters who have the full use of their limbs. I would suggest that the token could be signed for by the registrar in charge of the hospital, and I am quite sure that those honourable men who administer these hospitals could be trusted. There would not be more than 100 all over the country and the money and the tobacco would be safe in their hands. I commend my Amendment to the consideration of the Minister.

Mr. J. Griffiths: The Chancellor has asked me to say a word about this Amendment. I know about the point raised by the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton). As from 5th July, 1948, this permission for people to contract out of the insurance scheme will come to an end. It is a pity it was ever begun, but people did contract out of the scheme and when people do that they have to accept the consequences of contracting out. The difficulty is that this is not a particular case. There are large numbers of other people who claimed exemption from the old scheme because they had other schemes that worked better. I looked at this administratively with the Chancellor. It is true that there is the case of the South Metropolitan Company, but there are tens of thousands, even hundreds of thousands of workers, in separate industries who have claimed exemption. Who is to decide between them? Similarly with the other classes—the disabled and injured in hospital wards and in industries. As I


understand it, we have to look for a scheme that can be brought into operation quickly and one which covers an easily defined class. The pensioners are one. Quite frankly, although we have sympathy with this point, if we are to get a scheme that is to be administratively simple and reasonably practical we do not think we can go beyond what we have said.

Amendment negatived.

Sir W. Smiles: I beg to move, as an Amendment to the proposed Clause, in line 43, after"1946,"to insert:
and ex-service men and women in hospital who are in receipt of a disabilty pension.

Mr. Beechman (St. Ives): I beg to second the Amendment.

Question put: "That those words be there inserted."

The House divided: Ayes, 118; Noes, 205.

Division No. 307.]
AYES.
[10.53 p.m


Agnew, Cmdr. P. G.
Grimston, R. V.
O'Neill, Rt. Hon. Sir H.


Amory, D. Heathcoat
Hannon, Sir P. (Moseley)
Orr-Ewing, R L.


Assheton, Rt. Hon. R
Harvey, Air-Cmdre. A. V
Osborne, C


Astor, Hon. M.
Haughton, S. G.
Peake, Rt. Hon O


Barlow, Sir J.
Haadlam, Lieut.-Col. Rt. Hon. Sir C.
Peto, Brig. C. H. M.


Beechman, N. A
Henderson, John (Cathcart)
Rayner, Brig. R.


Bennett, Sir P.
Hinchingbrooke, Viscount
Reed, Sir S. (Aylesbury)


Birch, Nigel
Hogg, Hon. Q.
Roberta, Emrys (Merioneth)


Boles, Lt.-Col. D. C. (Wells)
Hollis, M. C.
Roberts, H. (Handsworth)


Bossom, A. C.
Howard, Hon. A.
Robinson, Wing-Comdr. Roland


Boyd-Carpenter, J. A,
Hurd, A.
Ropner, Col. L.


Braithwaite, Lt-Comdr. J. G.
Hutchison, Lt.-Cm, Clark (E'b'rgh W.)
Ross Sir R. D. (Londonderry)


Bromley-Davenport, Lt.-Col W
Hutchison, Col. J. R. (Glasgow, C.)
Sanderson, Sir F


Buchan-Hepburn, P. G T-
Jeffreys, General Sir G.
Scott, Lord W.


Mellor, Sir J.
Jennings, R.
Shephard, S. (Newark)


Clarke, Col. R. S
Keeling, E. H
Smiles, Lt.-Col. Sir W


Clifton-Brown, Lt.-Col. G
Lambert, Hon G.
Snaddon, W. M.


Cooper-Key, E. M.
Lancaster, Col. C. G.
Spearman, A. C. M


Crookshank, Capt. Rt. Hon. H. F. C
Legge-Bourke, Maj. E. A H
Stanley, Rt. Hon O.


Crosthwaite-Eyre, Col. O. E.
Linstead, H. N
Stoddart-Scott, Col. M.


Crowder, Capt. John E.
Lipson, D. L
Strauss, H. G (English Universities)


Cuthbert, W. N.
Lloyd, Selwyn (Wirral)
Studholnw, H. G.


Davidson, Viscountess
Luoas. Major Sir J.
Taylor, Vice- Adm E A. (P'dd't'n, S.)


Davies, Clement (Montgomery)
Lucas-Tooth, Sir H-
Teeling, William


De la Bere, R.
Macdonald, Sir P (I. of Wight)
Thomas, J. P. L. (Hereford)


Digby, S. W
Mackeson. Brig. H R.
Ihornton-Kemsley, C N


Dodds-Parker, A. 0
MacLeod, J
Thorp, Lt.-Col. R. A F.


Drayson, G. B
Macmillan, Rt Hon. Harold (Bromley)
Vane, W M F


Drewe, C.
Maitland, Comdr. J. W.
Wadsworth, Q


Dugdale, Maj. Sir L (Richmond)
Manningham-Buller, R. E
Wakefield, Sir W. W


Eccles, D. M.
Marsden, Capt. A
Walker-Smith, D.


Elliot, Rt. Hon. Walte:
Marshall, S. H. (Sutton)
Wheatley, Colonel M. d


Fielcher, W. (Bury)
Maude, J. C.
White, Sir D. (Fareham)


Fraser, H. C P. (Stone)
Butcher, H. W.
While, J. B. (Canterbury)


Fyfe, Rt. Hon. Sir D. P. M
Molson, A. H. E.
Williams, C. (Torquay)


Gage, C.
Morrison, Maj. J. G (Salisbury)
Willink, Rt. Hon. H. U.


Gammans, L. D.
Mott-Radolyffe, C. E
Willoughby do Eresby Lord


George, Lady M. Lady M. (Anglesey)
Neven-Spence, Sir B.
York, C


Gomme-Duncan, Col. A,
Nield, B. (Chester)
TELLERS FOR THE AYES:


Gridley, Sir A.
Noble, Comdr. A H P
Major Conant and Major Ramsay




NOES.


Adams, W T (Hammersmith, South)
Brook, D. (Halifax)
Davies, Edward (Burslem)


Allen, A. C (Bosworth)
Brown, George (Belper)
Davies, Ernest (Enfield)


Allen, Scholefteld (Crewe)
Brown, T. J. (Ince)
Davies, Harold {Leek)


Attewell, H. C.
Bruce, Major D. W. T
Davies, Haydn (St. Pancras, S.W.)


Awbery, S. S
Buchanan, G.
Davies, R. J (Westhoughton)


Ayrton Gould, Mrs. B.
Burke, W. A.
Davies, S 0. (Merthyr)


Balfour, A.
Butler, H. W. (Hackney, S.)
Deer, G.


Barstow, P. G
Caliaghan, James
de Freitas, Geoffrey


Barton, C
Caimichael, James
Delargy, H. J.


Bechervaise, A. E.
Champion, A. J
Diamond, J.


Benson, G.
Coldrick, W.
Dodds, N N


Berry, H.
Collindridge, F.
Donovan, T.


Beswiek, F.
Colman, Miss G. M
Oriberg, T. E. N.


Bing, G. H. C
Comyns. Dr. L.
Dugdale, J. (W Bromwich)


Binns, J
Corbet, Mrs. F. K. (Camb'well, N.W)
Ede, Rt. Hon. J C.


Blenkinsop, A
Corlett, Dr. J.
Evans, John (Ogmore)


Bowden. Flg.-Offr. H. W.
Corvedale, Viscou.1t
Evans, S. N (Wednesbury)


Bowles, F. G. (Nuneaton)
Crawley, A
Ewart, R


Braddock, Mrs. E. M. (L'pl, Exch'ge)
Daggar, G.
Fairhurst, F.


Braddock, T (Milcham)
Daines, P
Farthing, W J


Bramall, E. A.
Dalton, Rt. Hon. H
Fletcher, E. G M (Islington, E.)




Foot, M. M
McAllister, G
Silverman, J. (Erdinglon)


rorman, J, C.
McGheo, H, G
Silverman, S. S. (Nelson)


Fraser, T. (Hamilton
Mack, J. D.
Simmons, C. J.


Gaitskell, H T N
McKay, J. (Wallsend)
Skefnngton, A. M


Gibfeins, J.
McKinlay, A. S.
Smith, C. (Colchester)


Gilzean, A
Maclean, N. (Govan)
Smith, S. H. (Hull, S.W)


Glanville. J (Consent)
McLeavy, F
Snow, Capt. J. W


Gooch, E. G
Mallalieu, J. P W.
Solley, L. J


Gordon-Walker, P. C
Mann, Mrs. J.
Soskice, Maj. Sir F


Greenwood, Rt. Hon. A (Wakefield)
Manning, C. (Camberweil, N.)
Sparks, J. A


Crey, C. F.
Manning, Mrs. L (Epping)
Steele, T.


Grierson, E
Marquand, H A
Strauss, G. R. (Lambeth, N)


Griffiths, Rl. Hon. J (Llaneliy)
Mathers, G.
Stubbs, A. E.


Griffiths, W. D. (Moss Side)
Medland, 'H M
Sylvester G. O


Gunler, R. J
Middleton, Mrs. L.
Taylor, H. B. (Mansfield)


Guy, W. H
Millrngton Wing-Comdr E R
Taylor, R. J. (Morpeth)


Hale, Leslie
Moody, A, S.
Thomas, D. E. (Aberdare)


Hall, W G.
Morley, R.
Thomas, Ivor (Keighley)


Hamilton, L.ieut.-Col. R
Morris, P. (Swansea, W.)
Thomas, I. O. (Wrekin)


Hardy, E A
Mori, D. L.
Thomas, George (Cardiff)


Harrison, J.
Moyle, A
ThorneycroM, Harry (Clayton)


Hastings, Dr Somerville
Nally, W.
Tiffany, S


Henderson, Joseph (Ardwick)
Nicholls, H. R (Stratford)
Tolley, L


Hohnan, P.
Noel-Baker, Rt. Hon. P. J. (Derby)
Wallace, G. D. (Chislehurst)


Holmes, H. E. (Hemsworth)
Orbaoh, M.
Wallace, H W. (Walthamstow, E)


Hoy, J.
Palmer, A. M F
Watkins, T. E


Hi'bbard, T
Parkin, B. T
Watson, W. M


Hudson, J. H. (Ealing, W.)
Pearson, A
Weitzman, D.


Hughes, Hector (Aberdeen, N.)
Peart, Thomas F.
White, H. (Derbyshire, N.E.i


Hughes, H. D. (Wolverhampton, W)
Plaits-Mills, J F F
Whiteley, Rt. Hon. W


Hutchinson, H. L. (Rushclme)
Poole, Major Cecil (Lichfield)
Wilkins, W A.


Janner, B.
Popplewell, T
Willey, O. G. (Cleveland)


Jay, D P. T
Porler, E. (Warrington)
Williams, D. J. (Neath)


Jeger, G. (Winchester)
Pryde, D. J
Williams, J. (Kelvingrove)


Jeger, Dr S. W. (St. Pancras, S E)
Randall, H E
Williams, W. R rHeston)


Jones, D. T (Hartlepools)
Ranger, J.
Willis, E.


Jones, Elwyn (Plaistow)
Rhodes. H
Wills, Mrs. E. A


Jones, J H. (Bolton)
Richards, R
Wilmot, Rt. Hon J


Keenan, W.
Roberts, A.
Wise, Major F J


Kendall, W D
Robertson, J J (Berwick)
Woodburn, A


Kenyon, G.
Rogers, G. H. R.
Woods, G. S


Kinghorn. Son.-Ldr E
Ross, William (Kilmarnock)
Wyatt, W.


Kinley, J.
Royle, C
Yates, V. F


Lee, F. (Hulme)
Scollan, T
Zilliacus, K.


Leonard, W
Segal, Dr. S.



Levy, B W.
Sharp, Granville
TELLERS FOR THE NOES:


Lipton, Lt -Col M
Shawcross, C. N. (Widnes)
Mr. Michael Stewart and


Logan, D G
Shawcross, Rt Hn. Sir H (St Heles)
Mr. Hannan.


Lyne, A. W.
Shurmer, P.



Question put, and agreed to.

Clause added to the Bill.

Orders of the Day — NEW CLAUSE—(Reduction of duty and other relief in respect of certain mechanically propelled vehicles.)

(1) Section thirteen of the Finance Act, 1920 (which imposes duties of excise. in respect of mechanically propelled vehicles) shall have effect as if in paragraph 1 of the Second Schedule to that Act—

(i) for the word "Cycles," where it first occurs there were substituted the word "Vehicles";
(ii) after sub-paragraph (c) there were in serted the following sub-paragraph: —

£
s.
d.


"(d) Vehicles other than mowing machines, being vehicles with more than three wheels neither constructed nor adapted for use nor used for the carriage of a driver or a passenger
3
0
0;"

and

(iii) at the end thereof there were added the following words: —
Vehicles chargeable with duty under this paragraph shall not be chargeable with duty under paragraph 5 of this Schedule.

(2) The said section thirteen shall have effect as if in paragraph 4 of the said Second Schedule after sub-paragraph (6) there were inserted the following sub-paragraph: —



s.
d


"(bb) Vehicles designed and constructed as mobile cranes which are used on roads only either as cranes in connection with work being carried on on a site in the immediate vicinity or for the purpose of proceeding to and from a place wherethey are to be used as cranes and when so proceeding neither carry nor haul any load other than such as is necessary for their propulsion or equipment
5
0,"

and at the end of the said paragraph 4 there were added the following words: —
Vehicles chargeable with duty under sub-paragraph (bb) of this paragraph shall not be chargeable with duty under paragraph 5 of this Schedule.

(3) The vehicles referred to in the said sub-paragraph (66) shall be excluded from the provisions of section two of the Finance Act, 1935, withdrawing the rebate on heavy oils used as fuel for mechanically propelled vehicles and accordingly in paragraph (d)of


subsection (7) of that section for the words "sub-paragraphs (a), (b)," there shall be substituted the words "sub-paragraphs (a),(b),(bb),."

(4) Subsection (1) of this section shall be deemed to have come into operation on the first day of January, nineteen hundred and forty-seven, and subsections (2) and (3) thereof shall come into operation on the first day of January, nineteen hundred and forty-eight.— [Mr. G. R. Strauss.]

Brought up, and read the First time.

11.0 p.m.

The Parliamentary Secretary to the Ministry of Transport (Mr. G. R. Strauss): I beg to move, "That the Clause be read a Second time."
This new Clause effects reductions in respect of two types of motor vehicles. One is a new type of vehicle—-a four-wheel pedestrian-controlled tight delivery van. There have for some time been delivery vans of three wheels which have been mechanically propelled—the delivery van which goes round the streets and is in the charge of a man walking behind it. It has been much used for the delivery of certain types of goods. Recently a new van of four wheels has come on the market and is apparently popular. According to the law as it stands, such a van is regarded as an ordinary trade van and would be dutiable to the extent of £10 per annum. The three-wheel van at the moment has to pay only £2a year duty because it is classed as a tricycle. It has been suggested to us that it is too much to charge a four wheel van £10—that it would stop its development for export purposes and many other purposes. Therefore it is suggested that we should reduce the tax, which we have done to £3 a year. That is the first part of the Clause.
The second part is a reduction in the duty now payable on mobile cranes. At the moment these are regarded as goods vehicles, and are charged by reference to their unladen weight. Manufacturers and users have represented to us that the very high duties which are consequently payable are unreasonable, and may amount to as much as £120 for one of these vehicles. The result has been to make these mobile cranes very largely inflexible, which is particularly undesirable in present conditions when they are badly needed for housing operations. It has been represented to us that these vehicles should be considered as analagous to the excavating

and shovelling plant now chargeable at a rate of 5s. per annum. We have agreed to these representations, and in future these mobile cranes will be put in the same category as excavating and shovelling plant and be charged at 5s. annually. A consequential change which flows from this alteration is that these vehicles will be entitled to a rebate on heavy fuel oil, to which all vehicles enjoying a 5s. tax are entitled.
The first change in taxation that I mentioned comes into force as from 1st January this year. The second one on 1st January, 1948. The amount which the Exchequer will lose on the first concession will be negligible. On the second it will not be very much—a maximum of £40,000. I regret that the wording of this new Clause is rather complex, but that is unavoidable because the taxation of vehicles is referred to in several Acts. I am confident that these changes will be acceptable to the House.

Mr. Stanley: These appear to be two useful concessions and we are grateful for them. There are a few points on which I would like to be enlightened. One is in regard to these vehicles which are pedestrian propelled and mechanically controlled—or is it the other way round?

Mr. Strauss: The other way round.

Mr. Stanley: The point is, is there any danger that these vehicles may at some time be fitted with side windows? If they were fitted with side windows, they would come within the definition of shooting brakes.

Mr. Glenvil Hall: They are not passenger carrying.

Mr. Stanley: No, but I gather there is no reason why they should not carry passengers. It is a point that wants looking into; otherwise, the unfortunate people who think they are getting a concession might find that under another section of this Bill and an Order made the other day, they have suffered a severe loss. Secondly, I was interested in what the right hon. Gentleman said about the export trade in these vehicles. I do congratulate him on doing this afternoon something the Chancellor of the Exchequer was unable to do last night, make one constructive suggestion for reducing the deficit in our dollar exchange. For that reason we welcome the concession he has announced.

Viscount Hinchingbrooke: I gather from what the Parliamentary Secretary said, the first part of the Clause refer to vehicles which move on four wheels and are becoming more popular than those previously in use which moved on three wheels. I see that the reduction of duty is given only to those which have more than three wheels. I do not quite follow why the previously popular vehicles which moved on three wheels are not to be included in this reduction, whereas those having four wheels are to be included. I hope he will give us some explanation of that, I must confess I have never seen either a three- or four-wheeled vehicle of that kind, and perhaps there are other Members who feel as doubtful as I do about the quality and category of this type of vehicle. We might have examples put in Palace Yard so that we can see if my right hon. Friend is right in saying that side windows can be fitted into them, or whether they in any way resemble shooting brakes.
In regard to the second part of the Clause, about cranes, which are now to be reduced from some hundred pounds in tax, I think the Parliamentary Secretary said, down to 5s., I see the reduction applies only in respect of those cranes used in the immediate vicinity of a building site. What does that mean? Does it mean that those cranes which are moving out from their base down the road will be taxed at the old rate, and that when they come into some particular area where building is to take place they are, for some reason or another, classified in a different category? They are cranes which can move only under their own steam. It is very difficult to transport them in any other way, and why should the reduction apply only to those which are operative within a particular vicinity? It seems to me that the Clause has not been tightened up sufficiently in that regard, and I think the House is entitled to some further explanation of this sudden drastic reduction of taxation in respect of cranes which only operate in particular areas.

Mr. Henry Strauss: In the first class the vehicles are described as
vehicles other than mowing machines, being vehicles with more than three wheels.
What happens if they are mowing machines? It may be that these words

are necessary having regard to the complications of earlier provisions dealing with these vehicles, but I think it would interest the House to hear what is the taxation in the case of mowing machines, and whether any change is being made.

11.15 p.m.

Mr. G. R. Strauss: I will briefly answer these various questions. The hon. and learned Member for the Combined English Universities (Mr. H. Strauss) is quite right. The mention of mowing machines is necessary because the original Section of the Act contained that word and we have to repeat it here. There is no change in the taxation on mowing machines. The noble Lord the Member for South Dorset (Viscount Hinchingbrooke) has not fully read the new Clause. If he looks at lines 23 and 24 he will see that the cranes are defined as being used either on the site or proceeding to and from a place where they are to be used. Another question the noble Lord asked was whether there is any change in the taxtaion of the three-wheel vehicles. I obviously did not make myself clear. Three-wheel vehicles are now taxed at £2a year and the four-wheel vehicles at £10 a year. It is in order to make the four-wheel vehicles duty proportionate with the three-wheel vehicles duty that we are reducing it to £3 a year. In answer to the right hon. Member for West Bristol (Mr. Stanley) I can assure him that he need have no worry as this concession is confined to vehicles of a maximum weight of 8 cwt.

Clause read a Second time, and added to the Bill.

Orders of the Day — NEW CLAUSE—(Adjustment of rights between seller and buyer under certain sales of electric and gas appliances.)

"Whereas on the fifteenth day of April, nineteen hundred and forty-seven, a Resolution was passed by the Committee of Ways and Means of the House of Commons providing for the charge of purchase tax as from the following day on all domestic appliances and domestice apparatus being appliances and apparatus of a kind suitable for operation from electric or gas mains (subject to an exception for lighting and wireless appliances and apparatus, gramophones, and player pianos, clocks and parts of clocks, warming pads and blankets, hair drying machines, and infra-red and ultra violet ray lamps and radiant heat lamps) at a rate equal to two-thirds of the value of the goods (except in the case of any of them being of classes subject to tax at the higher rate):


And whereas, of the goods as to which that provision for charge at the said two-thirds rate was made, those falling within the Third Schedule to this Act are by this Act rendered chargeable to tax at that rate, but the remainder (in this section referred to as goods to which this section applies) are as respects tax unaffected by the passing of this Act:
Now, therefore—

(a) where goods of any description to which this section applies have been sold in the course of any business under a purchase made after the date of the passing of the said Resolution and before the passing of this Act at a price exceeding that at which, in the ordinary course of that business, goods of that description similar to those goods were sold or offered for sale immediately before that date, the buyer shall be entitled to recover an amount equal to the excess from the seller as money received by him for the use of the buyer, except in so far as the seller proves that the excess was included in the price by reference to matters other than any prospective liability or increased liability of his under any of the enactments relating to purchase tax arising from the charge provided for by the said Resolution, or any increase in the price charged on a purchase of the goods made by him after the date of the passing of the said Resolution attributable to any such prospective liability or increased liability of any other person;
(b)where, in respect of any goods to which this section applies sold under a purchase made on or before the date of the passing of the said Resolution and delivered under the purchase after that date and before the passing of this Act, the seller has recovered from the buyer, as an addition to the price, any sum fixed by reference to any such prospective liability or increased liability as aforesaid, the buyer shall be entitled to recover that sum from the seller as money received by him for the use of the buyer."—[The Solicitor-General.]

Brought up, and read the First time.

11.15 p.m.

The Solicitor-General (Sir Frank Soskice): I beg to move, "That the Clause be read a Second time."
This Clause is designed to deal with the case where, because of the Financial Resolution which paved the way for the 66⅔ per cent. tax for domestic appliances suitable for operation from gas mains or electrical mains, the seller has increased his price in anticipation of including the amount of anticipated tax. What the new Clause seeks to do is to say that where, after the Financial Resolution, and before the date of the coming into force of this Bill, a sale took place of an article covered by the Resolution that has not been made subject to the higher rate of tax by virtue of the Amendment to the Third Schedule we have moved, if the seller has included the tax in his price, the

buyer can recover it from him. What is likely to happen is this. The Financial Resolution was, of course, general in its terms and covered all domestic appliances suitable for operation from electric mains and gas mains. The Amendment which we have passed and which the House has approved limited that increase to the 66⅔ Purchase Tax items, that is, to space heaters and water heaters. So that a great many of the articles which any trader would have anticipated to be qualified for the higher rate of tax by the Financial Resolution turn out not to qualify for that higher rate, but to remain at the original rate of tax. Any prudent trader hearing of the Financial Resolution, would naturally increase his price to the seller by including in the amount of his, price what he thought he would have to pay by way of tax. It now turns out, except in respect of those things still on the 66⅔ tax, that he will not have to pay at the increased price. It is only fair that the buyer, to whom he had charged the increased price, should be entitled to recover from the seller the increase attributable to the amount of the tax the seller thought he would have to pay.
What the new Clause does is to say that where the seller increased his price and the sale took place after the Financial Resolution, but before the Bill comes into force, the buyer can recover that increase from the seller, unless' the seller can show that he increased his price without reference to the cost of any anticipated increase in the tax he thought he was going to have to pay. If the seller can show that he increased his price beyond what he was accustomed to selling at before, and without reference to the tax, but owing to some completely extraneous circumstances, and that the increased price was not attributable to the tax at all then the buyer cannot recover that increase from the seller. But where the increase is due to the fact that the seller thought he would have to pay more tax, which it turns out he has not to pay, the buyer is given the right to recover that amount from him. This is obviously a measure of justice, and it is to adjust a position which the Clause, by adjusting in that particular respect, prevents the buyer from being charged for a tax which in point of fact, because of the Amendment, was never imposed on the seller.

Commander Maitland: I notice that the apparatus concerned here is apparatus worked from gas mains. Does the new Clause also apply to calor gas apparatus?

The Solicitor-General: It applies to all goods which the Financial Resolution covered, but which have since been taken out of the scope of 66|rds per cent. tax. Whatever comes out as a result of the Amendments whch we have made to the Third Schedule—all those goods which are taken out and which therefore do not qualify for the increased rate of taxation—all those goods are goods in respect of which the power is given to recover the increase from the seller.

Sir A. Gridley: I feel that the buyers of these types of apparatus will probably be very grateful for the introduction of this new Clause which certainly will help in a considerable number of cases; but, of course, there will remain considerable difficulty in applying it where cash transactions have taken place. For instance, in electricity showrooms people frequently come and buy apparatus and pay cash for it and go off, so that there is nothing but a cash transaction recorded and no record of the name of the purchaser. I imagine that that will be the case in a great many shops. But where the transaction can be traced, this will certainly be an effective measure.

Mr. H. Strauss: May I put this point to the hon. and learned Solicitor-General? It may be that in explaining the Clause he included a slight inaccuracy in order to shorten his explanation but I think that in describing the case where the duty can be recovered he said "unless the seller proves" something. But that is not what the Clause says. It is not "unless"; it is "except in so far as," and that seems to me to mean that in certain cases the whole of the difference may be recovered from the seller, and in other cases part only. If I am right that that is the meaning of the Clause, then there are complications of working which are extremely grave. The purchaser will not know whether he can recover all or part only and, if so, what part. I should be very grateful if the hon. and learned Gentleman would say whether I am right in my understanding —that the words are deliberately not "unless" but "except in so far as",

and, if I am right, how the purchaser can possibly ascertain what he is entitled to recover.

The Solicitor-General: Both hon. Gentlemen who have spoken dealt with the same point, if I may say so with respect. The question was whether this is workable. The hon. and learned Gentleman is saying that the words are "except in so far as." There certainly has to be an allocation, there has to be an appropriation. Now, the question as to the practicability of the scheme was most carefully considered and fully discussed, and we came to the conclusion, after full consideration, that it would work. What the hon. Member for Stockport (Sir A. Gridley) says, in the case of the more expensive type of article where the transaction is reasonably well documented, is that there should not be any difficulty. He has the greatest experience in these matters and the House will pay great attention to what he says on it. What was felt with respect to the less expensive type of article was that there should not be really any difficulty.
There were considerable stocks on hand of the less expensive types of articles to which this tax would not be attracted and it was thought justifiable to adopt this comparatively simple scheme because, in the actual circumstances, it was felt that it would work. Most of the cases to which it would have to apply would be the more expensive type of article as to which it would be quite easy, by ordinary documents and records for the purposes of the sale, for the buyer to satisfy the seller as to the sale and for both parties to ascertain how far, if at all, there was an increase of price which was covered by the Clause. I can only say that the question of the actual workability of the scheme has been gone into, and the conclusion was reached that it will work; and it is for that reason that we have adopted this particular form of Clause.

Captain John Crowder: Will the Government make up their minds what tax they are going to put on these articles? The public keep ringing up and writing to Members of Parliament to ask if there is a tax on certain domestic articles, and whether it is at the rate of 33⅓ or 66f, and no one knows where he stands in answering these questions. The whole thing is a complete muddle. Will


the Government give out some statement on what is their policy and what they are going to do about Purchase Tax? It is intolerable for the householder, who cannot keep himself informed of what is going on. They are told that the Government have taken the tax off all electrical apparatus for the household, and then suddenly it is put on again. The same applies to motorcars. No one knows what is the Purchase Tax on anything at all. I hope the Government will clarify the situation a little more.

Mr. Assheton: I sympathise with the previous speaker when he says he is puzzled to know at what rate the tax on various things stands at at present. The only other observation I would like to make is that, of course, we are going to support the Chancellor of the Exchequer's Clause, although it seems to me rather clear that it may give rise to a certain amount of litigation. Perhaps the Solicitor-General will tell us whether he thinks this is so or not. The real point I want to make is that this illustrates the immense amount of trouble caused by these ill-considered proposals which the Chancellor of the Exchequer brings forward and then abandons. Next time, I hope he will think over any proposal more thoroughly.

Clause read a Second time, and added to the Bill.

Orders of the Day — NEW CLAUSE.—(Exemption from tax of training expenses allowances and bounties to members of reserve and auxiliary forces.)

The sums known as training expenses allowances payable out of the public revenue to members (whether men or women) of the reserve and auxiliary forces of the Crown, and the sums payable by way of bounty out of the public revenue to such members in consideration of their undertaking prescribed training and attaining a prescribed standard of efficiency, shall not be regarded as income for any of the purposes of the Income Tax Acts.—[Mr. Dalton.]

Brought up and read the First time.

Mr. Dalton: I beg to move, "That the Clause be read a Second time."
I hope that this Clause will be better received than the last, because it gives concessions for which requests were made from all parts of the House with regard to the Territorial Army. There was a

unanimous desire for this, when the matter was debated before, from hon. and gallant Gentlemen with practical knowledge of the several divisions of the Armed Forces. I am not going to make a long speech. The matter is extremely simple and quite clear. I must make it clear that I shall have to resist any requests to extend it. The Clause sets out that for the purposes of the Income Tax Acts from now on, training expenses allowances and bounties are not, in future, to be subject to Income Tax. I hope that this will be welcomed, but I must emphasise that this must not be a precedent to be extended and pushed forward with regard to any other class of case. I find it difficult to distinguish and justify this.
Training allowance is subsistence allowance and, with regard to the bounty, I think we may say the concession now put forward applies only to those bounties which, like the payments to members of the Territorial Army, are given for voluntary training and efficiency gained by service in a man's own time. The concession will not apply to reserve pay and other similar payments to members of the Regular Reserve, nor will it apply to the retaining fees paid to members of the Royal Naval Reserve. Those payments are not of the same nature as the Territorial Army efficiency bounty. They are retainers paid to men for liability for service in an emergency. I use these words carefully, after consultation with my right hon. Friends the Service Ministers, including my noble Friend the First Lord of the Admiralty. I hope on the records it will be clearly shown, first, what is the scope of the concession which I am glad to make; and, second, to issue a warning not to push me to make this new Clause cover cases which it is not intended to cover.

11.30 p.m.

Mr. Stanley: I should like to thank the Chancellor of the Exchequer for having met in this Clause the desires that were expressed on all sides of the House during the Committee stage of the Bill. We all recognise the reasons which have enabled the Chancellor of the Exchequer to distinguish these particular cases from other cases which are held to be part of a man's income and, therefore, subject to tax. The time may come when we shall press more concessions upon the Chancellor, but we shall not base those claims


upon the way in which he has met our requests tonight. I should like to congratulate him on something else. This is the only Clause that we have reached so far, and the only Clause we shall reach for a long time in the future, which is both short and intelligable.

Mr. Selwyn Lloyd: I should like to offer back-bench congratulations to the Chancellor on this concession. As one who is interested in the territorial Army, I could say some harsh things about the way in which it has been treated by the Government since its re-initiation, but as far as the Chancellor is concerned, may I offer my congratulations and thanks to him? He is the only Minister of the Crown who so far has done anything for the Territorial Army, and this concession will be welcome and will be of very great assistance.

Clause read a Second time, and added to the Bill.

Orders of the Day — NEW CLAUSE.—(Charge to tax in respect of provision for retirement or other benefits to directors and employees of bodies corporate.)

(1) Subject to the exemptions and provisions contained in the next succeeding section, where pursuant to a scheme for the provision of future retirement or other benefits for persons consisting of or including directors or employees of a body corporate (in this and the next four succeeding sections referred to as a "retirement benefits scheme") the body corporate in any year of assessment pays a sum with a view to the provision of any such benefits for any director or employee thereof, then (whether or not the accrual of the benefits is dependent on any contingency),—

(a)the sum paid, if not otherwise chargeable to income tax as income of the director or employee, shall be deemed for all the purposes of the Income Tax Acts to be income of that director or employee for that year of assessment and assessable to income tax under Schedule E; and
(b) where the payment is made under such an insurance of contract as is mentioned in section thirty-two of the Income Tax Act. 1918 (which relates to relief for life insurance premiums, etc.). relief, if not otherwise allowable, shall be given to him under that section in respect of the payment to the extent, if any, to which such relief would have been allowable to him if the payment had been made. by him and the insurance or contract under which the payment is made had been made with him.

(2) Subject to the exemptions and provisions contained in the next succeeding section. where—

(a) an agreement is in force between a' body corporate and a director or employee

thereof for the provision for him of any future retirement or other benefits afforded by a retirement benefits scheme, or a person is serving as a director or employee of a body corporate in connection wherewith there is a retirement benefits scheme relating to persons of the class within which he falls under which any such benefits will be provided for him; and
(b) the body corporate does not, or does not fully, secure the provision of the benefits by the payment of such sums as are mentioned in the preceding subsection; and
(c) the circumstances in which the benefits are to accrue are not such as will render the benefits assessable to income tax under Schedule E as emoluments of his office as a director or of his employment,
then (whether or not the accrual of the benefits is dependent on any contingency), in each year of assessment in which the agreement is in force or the director or employee is serving as aforesaid, up to and including the year of assessment in which the benefits accrue or there ceases to be any possibility of the accrual thereof, a sum equal to the annual sum which the body corporate would have had to pay in that year under a contract with a third person which secured the provision by that third person of those benefits or, as the case may be, of those benefits so far as not already secured by the payment of such sums as are mentioned in the preceding subsection, shall be deemed for all the purposes of the Income Tax Acts to be income of the director or employee for that year and assessable to income tax under Schedule E.

(3) Where the body corporate pays any sum as mentioned in subsection (1) of this section in relation to several directors or employees, the sum so paid shall, for the purpose of that subsection, be apportioned among them by reference to the separate sums which would have had to be paid to secure the separate benefits to be provided for them respectively, and the part of the sum apportioned to each of them shall be deemed for that purpose to have been paid separately in relation to that one of them.—[The Solicitor-General.]

Brought up, and read the First time.

The Solicitor-General: I beg to move, "That the Clause be read a Second time."
This new Clause relates to retirement benefits. This is the first of a series of five Clauses which are designed to replace Clauses 14 to 18 of the Bill as it stands. I do not know whether it would be convenient if the Debate on this Clause were extended so that I could deal with the five Clauses together as they all hang together and form one single scheme.

Mr. Speaker: If it is the wish of the House that a general discussion should take place on this Clause, it might be the more convenient.

Captain Crookshank: That is quite agreeable to us.

The Solicitor-General: I am much obliged to the House. What we have sought to do in framing these Clauses is to give effect to the various criticisms which were directed against the Clauses, which I have mentioned, by hon. Members when the Clauses of the present Bill were under discussion. In general terms the major criticism was directed most to Clauses 16 and 17 of the Bill. They were the Clauses which dealt with the voluntary payments, and it was urged that they would bear hardly upon non-whole-time directors and other directors and employees and impose a harsh and severe burden upon them. Only detailed criticism was directed to the first two Clauses, and it was felt during all the discussions that they were apt to remedy what was a serious abuse or potentially serious abuse. Therefore, what we have done in refraining the Clauses is virtually this. We have thrown overboard entirely what there was in Clauses 16 and 17 and we have confined the new Clauses to doing what was done in a slightly different form in Clauses 14 and 15. We have then gone on to deal with certain matters of detail.
If I may review quite briefly what we have done it is as follows. Clauses 14 and 15 are Clauses which deal with schemes under which a company has paid various sums year by year to insurance companies or trustees to provide benefits. They deal also with conditions of service under which a company has undertaken to provide benefits. In both cases whether these benefits consist either of non-taxable lump sums or of annuities or pensions convertible into non-taxable lump sums, or which are wholly disproportionate and in excess of anything which might be described as a reasonable pension—in respect of those cases, which by common consent were cases which really required to be dealt with, what we have done is done by Clauses 14 and 15.
We have said that the amount paid by the employer shall be treated as income and if no amount is paid and payment is to be found out of the funds of the company we take a notional figure, which shall be attributed to the employee as taxable income during the years of his employment. That is a principle to which I do not think any exception has been taken. It has been conceded to be fair and reasonable. But again, we have introduced exceptions which were introduced in the

previous Bill but in a slightly larger and more generous form. The exceptions apply to statutory superannuation schemes. They apply to schemes approved under Section 32 of the Finance Act of 1921 and they also apply to schemes which are ad hoc approved by the Commissioners for the purposes of this Clause.
Broadly speaking, the Commissioners are given power to approve, and indeed, it is made obligatory on them to approve certain schemes, provided the amount is paid by the company for an annuity and provided the schemes comply more or less—because there is a measure of discretion left to them—with certain requirements. These requirements, if I may summarise them as briefly as I can, are that the scheme should conform in outline, generally speaking, to what could be considered to be, in ordinary common parlance, a bona fidesuperannuation scheme. Any schemes falling within these three categories are not affected by the new Clauses, they are entirely outside, as they were before, but we have introduced further provisions to deal with points of criticism.
First of all, we exempt altogether any scheme existing before April, 1944, the main benefit to be provided is a life pension or annuity. That is the first thing we propose.

Mr. Selwyn Lloyd: Before he leaves that point may I ask the hon. and learned Gentleman why he fixed that date and not a later year than 1944?

The Solicitor-General: Because by that date, at any rate, all the schemes were known. There is a discretion in regard to later schemes. Any scheme which was pre-April, 1944, is a scheme known to the authorities and its qualities have been assessed and understood. We further do this. A question was asked whether anything could be done in regard to provident schemes designed to provide for lump sum payments. What we have done is to exempt small provident funds and endowment insurance schemes providing for small lump sum payments. We have fixed this limit that the employer must pay not more than 10 per cent. of the employee's remuneration to the fund or not more than £100, whichever is the less. We have accepted this. It was not done in the last Clause but was a point brought up in the discussion What we have also done is that we have


made provision for tax to be reclaimable by an individual who can show, for example, that he has been dismissed or for some other reason will not get the benefit in respect of which the tax is paid. That point was also made during the discussion.
My hon. Friend the Member for North-wich (Mr. J. Foster) raised a subtle and complicated point relating to employees overseas. He instanced the question of an Indian company which is paying pensions in India, and asked whether the Indian company's Indian employees would be covered? We have now exempted these and employees employed abroad who would not have come under Schedule E. We have made it possible for part of the scheme to be approved even if the whole scheme is not approved. It can be dissected and approved in part.
Finally, we have said that, if a scheme which at present does not qualify for approval is changed, and changed before April, 1948, or any longer time which may be allowed by the Commissioners for that purpose—if it is not reasonably practicable to change it within that time—it can be approved retrospectively to April, 1947. We think that is a fair way to deal with the matter. It gives people an opportunity of adjusting the scheme to comply with the requirements which we have set out, and adjust it in such a way as will qualify for approval, not only from the date of adjustment but from April, 1947. All these Amendments are in the new Clauses which are rather long but which give effect to what I have been saying. We hope the House will agree that in so doing, we have met the criticisms which were advanced against the old Clauses and we hope also, that these are more easily intelligible than the others.

Mr. Selwyn Lloyd: Before the hon. and learned Gentleman sits down may I ask him this question? He spoke of the reclaiming where no benefit is to be derived. Can he say whether the ordinary six years' limit applies to reclaiming, or will it go back further?

The Solicitor-General: I speak offhand and subject to correction, but subject to that qualification the six years' limit, I think, would not apply. I think it applies only to claims of tax under the

Acts of 1918. I do not think it would apply in this case. I want to make it clear that that is my first-view answer which, however, I believe to be right.

Captain Crookshank: I am sure the House is indebted to the hon. and learned Gentleman for his clear explanations which we are now getting so used to receiving when he addresses us on technical matters that the Chancellor is putting into this Bill. These points have, of course, all arisen as the result of a promise the Chancellor made. There have been discussions with regard to this Clause and the result is now before us. The original Clauses which have been dropped, occupied no less than eight pages of the Finance Bill as introduced. The new Clauses given to us look as if they will cover as much paper in the next stage as those for which they are being substituted. I am glad the Government have been able to modify the attitude which previously they had taken up, because we on this side of the House were with them at the start, when they said there were certain gross evasions taking place, as indeed we always would be in saying that these evasions must be dealt with.
11.45 p.m.
While we did not specify, have not specified and do not intend to specify what the abuses were, we know what they are from discussions which have taken place. As I understand it, three things of real importance now emerge. As the hon. and learned Gentleman has said, first of all, all schemes which are pre-1944 are automatically exempted—obviously, if their main purposes are within the scope of what we are discussing. The second new point is that if a scheme falls within the conditions—and they are fairly hard conditions, if that is the right word—laid down in the third new Clause, then the Commissioners have to approve it: there is no option there. The third important point is that in spite of that, the Commissioners are given by the general effect of this new scheme a very wide discretion. In brief, all pre-1944 schemes are exempted, new schemes which come within the conditions of the third Clause have to be approved, and thirdly the Commissioners are given wide discretion.
It seems to me—and I am no expert in this—that what one might call genuine schemes, whether existing or future, will


really be all right. The genuine scheme will be all right even if lump sum payments—which were the chief cause of the mischief we are dealing with—are involved in schemes hereafter. Even it there are lump sum payments, that does not automatically disallow a scheme if the lump sum payment is in scale with that length of service, or the previous salary or pay of the person concerned. I understand this was really the intention of the previous Clause, although that did not emerge quite clearly at the time.
I would like to ask the hon. and learned Gentleman one or two questions, the answers to which we would like to have quite definite and clear. I think, first of all, he can give me the assurance that powers under this new Clause would not be used to damnify a person who is given a pension related to his length of service and to the remuneration he has received, if such a pension is in line with schemes which the Revenue would view with favour. There may be cases—and this is the actual point I have in mind=—where, for example, a scheme is drawn up and some man does not fall within its scope for the very reason that the moment the scheme is going into effect, he is too old to take advantage of it, although he has long service, and his company wants to help him in his retirement. Such a person would not be damnified because he was not in the scheme—provided that what is given to him is in general line with what he would have got if he were in the scheme? I think that is the case and I hope when the right hon. Gentleman comes to reply he will give me that assurance because I understand it is for this that the new Clauses have appeared on the Paper. It is a point which has worried' a number of men, and women, too, who might be concerned.
The second point which I think is clear from what the right hon. Gentleman said is that any penalties under these Clauses in schemes which fall foul of the views of the Commissioners or in favour of which they will not exercise discretion, will not be retrospective. We should like that stated definitely for the purpose of the record. I think it is also quite clear and implicit in what he said—that all these arrangements and plans are only intended to deal with schemes which are clearly designed, in the view of the Commissioners to avoid taxation. I think that is

a fact, but if the right hon. Gentleman can put this assurance into words in a favourable sense I shall be very much obliged.
What is the lesson we are to draw from all this? I think it is regrettably the case that in periods of high taxation there are some people—we need not necessarily admire them—who will go to great lengths to see if there are legal ways of avoiding taxation.

Mr. Gallacher: It seems to me that there is much concern to safeguard directors, but they are all right when it comes to dodging taxation.

Captain Crookshank: That is a view which may be held by the Communist Party but it is not universally held. There is a high judicial decision that if it is legal to do so, and if taxation can be avoided legally, there is no reason why people should not take advantage of it. That is a decision, I think, of the highest courts: whatever the moral view of it may be is another matter. All I was saying was that there are some people who will try to avoid taxation when it gets to such a high scale, and this and other features will progressively diminish when happier times come and taxation can be reduced. The other point that emerges and to which I would draw the attention of the right hon. Gentleman, and the Financial Secretary, is that when it had been decided, as it was decided, to tackle this problem, there might have been a saving of time and trouble to a great number of people if, granted the intentions of the Government were known, the Government had taken into consultation some of the experts, whom they were good enough to consult between the Committee stage and the Report stage, before they introduced the Bill. If they had been able much earlier to get into contact with certain people who gave them help they might have been saved much trouble and anxiety. It would have been much less trouble, and I had hoped that that course might have been adopted— obviously, under the ban of confidential talks.
But so long as the Government have found it necessary to embark on this very difficult sphere of law, and the complicated question of taxation on benefits and annuities, might it not be a good thing— again I only put it to the Government— to have all this field explored between now


and some future Finance Bill? I did make some reference to this on a previous occasion. It has been explored in Canada and other Dominions because it is such a complicated part of the Income Tax law, and even if we are not going to clear up the whole field it might be well to look at this section of it. I suggest to the hon. and learned Gentleman that that might be a pleasant occupation for him when he has finished with the Finance Bill this year, and while he has leisure— if he is still in office—before the heavy duties which will come to him with the Budget of 1948. Having said that, I again express our gratitude to the hon. and learned Gentleman for having taken so much trouble in this matter. As at present advised, it seems to me that the new Clauses meet the bulk of the criticisms we put forward at an earlier stage, and I hope he will be able to give me formal assurances on the three points I have put to him.

Major Haughton: I am sure I speak for everyone in the House in thanking the Government and the Chancellor of the Exchequer for the reconsideration that has been given to these Clauses, which were originally Clauses 14 to 18. I apologise for making at this late hour what is sure to be a dry and uninteresting contribution to the Debate. The Chancellor of the Exchequer has eliminated the original five Clauses and has substituted these five new ones. Under the original draft, as my right hon. and gallant Friend has said, these Clauses sought to deal with certain known evasions. I think they should be clearly understood. They were principally concerned with the existing law relating to lump sum payments, either by way of endowment assurance or other benefits. I do not want to take up time with a detailed analysis of the law as it applies to such cases, but if we are to know the real significance of the Clauses which have now been introduced we have to understand exactly how the law stands on these matters.
At present a lump sum payment on retirement, as part of a contract of service, is taxable in full in the year it is received; and as regards insurance policies, if a company takes out an insurance on an employee, which is fully vested in him, that insurance is treated for tax as part of his income. There is an aspect of that

which is very important. It was realised by certain people that if contingencies could be imported into the arrangement the existing law could be avoided. I think this is a very important part of the new Clauses which the Chancellor has introduced.
12 m.
The most prevalent type has been the purchase by companies of a very large endowment assurance for directors, which they receive on retirement and which is free of tax but the premium of which has been paid out of the trading expenses of the company. The method devised to deal with such cases was to see whether benefits which accrue would or would not depend on a contingency. Unfortunately, in dealing with existing abuses the Clauses were extended to deal with all sorts of situations which might arise and as I read the original five Clauses it seemed to me it was rather like casting a net to take a few pike out of the river and enmeshing all the salmon and trout. But the main changes which the Chancellor has seen fit to make in Clause 16, dealing particularly with part-time directors, which had been dropped altogether, and in the elimination of Clause 17, disposes of a very large number of objectionable aspects that we on this side found in the original Clauses.
I want to make one or two point which I think are important. The first concerns the provision that has been made that the Commissioners shall look at these things. I think the Chancellor has shown great faith in them—that they will apply their wisdom and judgment to conditions on which a pension or annuity would be allowed. The main objection to the original Clauses has been removed, but I think there is failure to see that all the existing or future pensions funds of a genuine character will escape these Clauses. I do not want to be over-critical because as I say, and as has been said by my right hon. Friend on the Front Bench, we are very grateful for the changes that have been made, but I would like to ask the Solicitor-General to give heed to the third Clause to be moved by the Chancellor on the approval of retirement benefit schemes. If he will turn to Subsection (1), paragraph (c) he will see
that the proportion between the value of the pensions…and the value of all other benefits …
as are commutable, that is, of course,


the capital sum. is to be determined on the basis of what is "reasonably comparable" to "statutory superannuation schemes." I have a great regard for these statutory schemes but I think they are based on the service of the individual concerned. In modern industry, where you get an individual moving from firm to firm, it is quite likely that an operative or executive with good ability moves from one firm to another until at the age of 45 he reaches a firm with which he will serve for the rest of his life. His firm may have no actual scheme. I suggest, with great respect, that the services he has rendered to industry, apart altogether from the years of service he has given, should be taken into account. I think that where the scheme says that it should be reasonably comparable, that fact should be taken into account.
We have seen that this scheme which we are debating tonight is very intricate; and it is very hard to assess the exact significance of it. It has been subjected in Canada and elsewhere to an inquiry. While I very much appreciate the courtesy of the Chancellor in recommitting this, I think that if we look to Canada, where the authorities were confronted with a similar problem, we shall see that they set up a Royal Commission to inquire into retirement benefits, life assurance and the taxation of annuities. I suggest that this forms a portion of Income Tax law which might well be inquired into without reopening the whole field of Income Tax law. I end by repeating that I very much appreciate the fact that the Chancellor has withdrawn the whole of those Clauses, and that he has introduced five new Clauses which go a very long way to meeting the points that we raised; but I still think that this aspect of Income Tax law should be the subject of an inquiry, and I hope that such an inquiry will be held before this time next year.

Colonel Crosthwaite-Eyre: I should like the hon. and learned Gentleman to deal with one or two minor points on these new Clauses that he has drawn up in substitution for those formerly in the Bill. The first is in regard to the second new Clause. In line 4, the words occur
(whether in whole or in part).
I should be grateful if he would say exactly what those words are meant to

effect. As this Clause is at present drafted it is not, as I read it, at all clear, and I think he should say something more on that subject. My right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) has mentioned the question of schemes that were excepted those prior to 1944. But I think the House ought to be told a little more about those schemes that are not going to be automatically excepted. Reference has been made to Subsection (2) of the second new Clause, but I should be grateful to hear from the hon. and learned Gentleman more about Subsection (2) of the fourth new Clause. It does seem to me that that fourth new Clause is very wide, and that it could well mean that, where several schemes are run by a body corporate, a good one, one such as would fall within the exceptions, could be ruled out because the others were bad. If I read it aright, it says that if, in general, the schemes were bad, a good one would fall as well as the bad ones. I think the hon. and learned Gentleman should make clear what the intentions of the Government are. on that point. In regard to the third new Clause I would ask a question about retirement In line 35 the new Clause deals with the case of a person who never expected to get any benefit whatever. The actual words are
by repayment or otherwise as may be appropriate.
I would like to know from the Solicitor-General what is the meaning of the words "or otherwise as may be appropriate." Does it mean that when a person is behind with Income Tax payments sums may be appropriated from him by the Treasury for the payment of other claims? If that is so it is a most dangerous precedent and one in legislation in this House we have always tried to avoid. I hope that we can have an assurance that that is not so. There is another point in line 38 where it deals with repayments in part and where the Commissioners are empowered to repay. I quote the exact words:
as may seem to them just and reasonable.
There should be some method of appeal from what the Commissioners may direct. As I read the Clause, where there is a sum of money due to a person under a scheme and the Commissioners make an allocation, there is no appeal whatsoever. I think that that is a bad thing. There


should be a method whereby the person concerned has a right of appeal against the decision of the Commissioners.
In the third new Clause very considerable discretion is allowed to the Commissioners and with that I agree, but again I would like to ask the hon. and learned Gentleman particularly with regard to this matter, if he would look at that Clause, for one of the main conditions is that none of the benefits can be commuted. Who is to determine in what circumstances the benefit cannot be commuted? It may be that a man wishes to complete the purchase of a house, for example, where an employee has paid on a house certain sums over years and he has to retire early, and wishes to use that benefit to pay off the sum remaining on the house. Would that be an infringement of these provisions, or would it be an infringement to assign part of the benefit for the education of his children or if he was to make a maintenance grant to some near relative, to, say, his sister-in-law or someone of that sort? Would that in fact be an infringement of the regulations? I agree that the Commissioners have wide powers of discretion but we would like to know something of the general principle which lies behind it.
I would ask the hon. and learned Gentleman, in relation to this Clause, if there is any method whereby an individual can appeal particularly in regard to Subsection (2), which does seem to be very dangerous. Here the Commissioners can at any time withdraw their consent to a scheme for any reason that they decide to be a proper reason. It is perfectly possible that if a body corporate has entered into a scheme and then can be served with a notice, that the scheme is no longer appropriate. There is no appeal from that provision, and as far as I can see it might lead to very considerable trouble.
Now with regard to the fifth Clause— the definition of a "controlling director". It starts by saying that he is one of the directors who control the company. Now the phraseology here is very different from that in the Companies Bill. Is it intended that this phrase in line 5 of the fifth new Clause is to have the same effect as what is called "a director controlling a company" in the Companies Bill, or if not, what interpretation is to be placed on these words—"a director having a

controlling interest therein"? As drafted it might mean anything. Further what is the intention in introducing the words "more than five per cent."? As it reads at the moment, no director who has more than five per cent. beneficial interest in any company can claim that any scheme shall be to his advantage. He is ruled out automatically.
I would like the hon. and learned Gentleman to think for a moment what that means. Take the thousand and one small businesses in the county towns and country towns of England. There, very often, a young person is offered an interest, but he is usually only offered an interest if he will put up capital for the business. In other words, he buys a partnership. It is not a partnership commercially, yet that is what it comes to. Under this Clause, that will be ruled out because anyone putting up five per cent. by which he takes a share, will, at the same time, be able to take no part in any superannuation, or any other, scheme. It seems to me that that is very bad, particularly for the development of small businesses. I cannot see any practical use in it. Of all the Clauses we have dealt with, this is the worst Clause which has been put before us, the retention of this five per cent. It can only be a great stumbling block to the development of small businesses. I must apologise to the House for putting so many questions.

12.15 a.m.

Mr. Howard: There is only one observation I wish to make on this new Clause. It arises out of some points made by the right hon. and gallant Member for Gainsborough (Captain Crookshank). He pointed the moral that high taxation inevitably leads to attempts to avoid that taxation. He also pointed out that these five Clauses as originally presented to the House, occupied eight pages of the Finance Bill. There is no one in any part of this House who does not share the view that our official tax-gatherers, whether they be in the Treasury or the Inland Revenue, are among the most competent, at that not particularly pleasant job, of any such people in the world. Yet there were presented to this House eight pages which have had to be withdrawn and replaced by new provisions. That suggests to me that the Government


should take very serious warning of what this may mean. Are these most competent officials really undergoing such a strain that there is a danger on breakdown? I am very concerned that these men, to whom we have all looked for years to produce the best class of work in this highly technical and difficult field, should have produced, on this occasion, so much which has had to be withdrawn. I think the whole house should know that, and consider whether there are not some serious factors lying behind it. That is all I have to say.

The Solicitor-General: I will endeavour to meet most, or some of the points raised, but I should perhaps point out that a lot of questions have been addressed to me. With regard to the remarks of the hon. Member for St. George's (Mr. Howard), I was very glad to hear his encomium on those concerned with the imposition of taxes, and if I may respectfully say so—

Mr. Howard: Not the imposition of taxes.

The Solicitor-General: Well, shall I say the framing of legislation?

Mr. Howard: Who have the task of collection.

The Solicitor-General: I was very glad to hear the hon. Gentleman's remarks about those who have the task of framing legislation of this sort which, in the case of these particular Clauses, is extremely difficult, as hon. Members will realise. With regard to his references to their workmanship, I would point out that the objection to the Clauses raised by the Committee was that they went too far, not that the machinery would not work, but that they were too drastic. That really was the gist of the criticism.
I will pass from that to other matters, and deal with the questions I was asked. The hon. and gallant Member for New Forest and Christchurch (Colonel S. Crosthwaite-Eyre) asked a number of questions which I tried to get down, and which I will try to deal with—at any rate, the more important ones. Take the question of appeal. I was asked about the question of appeal. That is an important point. A person who is assessed has the ordinary right of appeal, including the person assessed under this Clause. Then the hon. and gallant Gentleman says there

is no right of appeal in the case of refusal, but in some cases there are rights of appeal. There is no right of appeal under Section 32 of the Finance Act, 1921. The right of appeal was not thought necessary there. Not only is that the case here, but there is this additional consideration—supposing the scheme does not qualify for exemption it can be altered. Supposing the Commissioners feel that it does not comply adequately with the provisions laid down, and, therefore, decline to accept it as a scheme coming within the scope of the Section, those responsible for the scheme can alter it so that it does comply. I would like to emphasise this point, because it is very important. If the changed scheme is acceptable to the Commissioners it is then made retrospective from April, 1947. So I would submit to the House that although it is true we have not given the right of appeal, any more than the right of appeal was given under the provisions of the analogous Section of the 1921 Act, we have, in point of fact, been very fair— I would almost say generous—in what we have done by making it possible for a scheme not accepted to be altered, and if it is so altered and accepted it comes within the scope of exception and it is retrospective to April, 1947. That I submit is not only ample, but it is more satisfactory because if the hon. and gallant Gentleman will consider the sort of thing that might arise out of an appeal it is much better for perfectly bona fidepeople to present their scheme and for the Commissioners to tell them that in one Section it is not satisfactory, whereupon they can take it back, have it altered, and then when it is accepted have it made retrospective to April, 1947. That is better than submitting something to the adjudication of a third party in an atmosphere of quarrel. We think that here we have adjusted these matters satisfactorily.

Major Haughton: Does the Solicitor-General suggest that the benefit of having the right of appeal is of no consequence at all, and that this decision should rest entirely in the hands of the Commissioners?

The Solicitor-General: I do not suggest that, but I do suggest that in some matters of dispute it is better that a matter should be adjusted through discussion, and that a loophole be left for adjustment, than that one should have


the position of people at arm's length resorting in an atmosphere of hostility to the adjudication of a third person. I agree that in cases where people are at arm's length there should be an appeal, and if a person is assessed for tax under this Clause and desires to appeal he has the ordinary remedies by way of appeal. We feel, following the precedent of the 1921 Act, that we have done the right thing here and we have added a provision to make such a scheme retrospective to 1947.
I was also asked a question with regard to commutation. It is not what form the commutation takes which is important; it is the quantity. It does not matter how the matter is commuted. A person can commute a pension either by a lump sum payment and, as was suggested by the hon. and gallant Member for New Forest and Christchurch, by acquiring a house. All those facts would come within the scope of commutation. The question is: Is the amount commuted an amount which can be said to bear a fair relationship to the amount which is not commuted? As to whether a debt can be set off against debts due from the taxpayer, the ordinary law would apply. If a creditor has a right against a debtor who owes the debtor money, the ordinary law says those reasonable debts shall be set off. I did not think there is anything unreasonable in that particular respect.
The hon. and gallant Member also asks about the words "in whole or part" in, I think, the second Clause. I think he will find the answer in Section 32 of the Finance Act of 1921 which deals with the approval of schemes within this Clause. He will see the answer to his question there. If he will allow me to leave that point, I will come to what the hon. and gallant Member for Antrim (Major Haughton) said in the course of his speech, which, if I may say so, shows, as we all knew, that he has taken the very greatest interest in this particular question. We are most interested in the Canadian experience in this particular branch of taxation. Indeed, all systems of taxation have something analogous about them. Any community can always learn from the experience of its neighbours and we do pay the greatest attention to the experience of other communities in this field of legislation.
The hon. and gallant Member mentioned the question of contingency. He put his finger there on a very important

point. It has been a not infrequent form of abuse to make a payment contingent, and if we did so alter the present law the payment to the employee could not be read as payment forming part of the remuneration of the employee and, therefore, taxable. So that one of the things we have done is to endeavour to frustrate that particular device—because I think it is not unfair to say it has really, generally speaking, I will not say always, been a device for the purpose of tax evasion.
In regard to the employee who moves from firm to firm, we do not affect his position one way or the other. He is covered by the general bona fidescheme and assuming the schemes of the various companies through which he moves are bona fide schemes under the Acts he will be within the exemptions and his rights will depend upon the particular nature of the scheme within which he falls. We do not affect the position in one way or the other. We do not put him in any worse position.

Major Haughton: May I interrupt the hon. and learned Member. I cannot agree with him. I think if he goes from one firm to another, say, at 45 years of age, and they have no pension scheme at all, he is in a worse position and his service in industry should be taken into account.

12.30 a.m.

The Solicitor-General: I see my hon. and gallant Friend's point. The point I want to make, in reply, is that we do not in any way affect the position. The man is left as he was. We do not worsen his position: we do not improve it.
If I may come now to the right hon. and gallant Gentleman, the Member for Gainsborough (Captain Crookshank), I think I can give him the three assurances for which he asked. First of all, I think I can say with emphasis that these Clauses are designed to deal only with attempts at tax evasion. That is their whole scope and purport. The right hon. and gallant Member's second question was whether this legislation did impose any form of retrospective tax liability. As to that I can tell him the answer is, "No liability prior to 1947 48."As to the series of questions he asked as to whether this affects what I might call voluntary payment—it certainly will not. We have been very careful to leave it out of account. Therefore I think I can give him


the first assurance for which he asked. I hope I have dealt in reasonable detail with the many questions that have been asked and I hope the Clause will commend itself to the House.

Clause read a Second time and added to the Bill.

Orders of the Day — NEW CLAUSE.—(Exemptions from charge to tax under the preceding Section.)

(1) The following payments shall be exempted from the operation of Subsection (1) of the last preceding Section, that is to say—

(a) payments made pursuant to a statutory superannuation scheme, or made to a superannuation fund approved (whether in whole or in part) by the Commissioners of Inland Revenue for the purposes of Section thirty-two of the Finance Act, 1921;
(b) payments made pursuant to an excepted provident fund or staff assurance scheme or other similar scheme (as defined in the last of the Sections of this Act relating to retirement or other benefits);
(c) payments made by way of premium pursuant to a scheme the benefits Where-under are secured by premiums payable by the body corporate, with or without contributions by the directors or employees affected, under life or endowment assurance or life annuity contracts, being a scheme which was in operation before the sixth day of April, nineteen hundred and forty-seven, and which is not confined, or substantially confined, to directors and persons, who, not being directors, are remunerated at a rate exceeding two thousand pounds a year or to directors or to such persons.

(2) Neither Subsection (1) nor Subsection (2) of the last preceding Section shall apply so as to cause any sum to be deemed to be income as therein mentioned where the retirement benefits scheme in question is one under which the main benefit afforded to each of the persons to whom the scheme relates is the provision for him of a pension or annuity for his life, and either—

(a) that scheme was in operation before the sixth day of April, nineteen hundred and forty-four; or
(b) that scheme is for the time being approved by the said Commissioners under the next succeeding Section.

(3) Where in respect of the provision for a director or employee of any future retirement or other benefits a sum has been deemed to be income of his by virtue either of Subsection (1) or of Subsection (2) of the last preceding Section, and subsequently the director or employee proves to the satisfaction of the said Commissioners that no payment in respect of, or in substitution for, the benefits has been made and that some event has occurred by reason whereof no such payment will be made, and claims relief under this Subsection within three years from the time when that event occurred, they shall give relief in respect of tax on that sum by repayment or other wise as may be appropriate; and if the

director or employee satisfies the said Commissioners as aforesaid in relation to some particular part of the benefits but not the whole thereof, they may give such relief as may seem to them just and reasonable.

(4) Where apart from this Subsection any sum would be deemed, by virtue either of Subsection (1) or of Subsection (2) of the last preceding Section, to be income of an employee for any year of assessment, but, by reason of his exercising his employment outside the United Kingdom he is not assessable to income tax under Schedule E in respect of the emoluments of his employment for that year, that Subsection shall not apply so as to cause that sum to be deemed to be income of his for that year.—[The Solicitor-General.]

Brought up, and read the First time.

The Solicitor-General: I beg to move, "That the Clause be read a Second time."

Mr. Eccles: I have two small questions to ask on this Clause. The first relates to Subsection 1 (1, b). Where a provident fund has been approved, will the employee get Income Tax relief for his contributions to that fund in the same way as he gets Income Tax relief to a superannuation scheme under Section 32 of the 1918 Act? The second question I have to ask concerns Subsection (4) which I understand we owe to the hon. and learned Member for East Leicester (Mr. Donovan). I ask him if he will support me in asking for a widening of that Subsection. As it stands, it covers only nonresident employees. It does not seem fair that it should not cover non-resident directors. I am particularly thinking of a case of a mine manager who has worked in a mine overseas and who knows that when he has done a few years service abroad he will be put on a board. The definition of director includes a man who is to be a director. That is a very common thing, when a man serving abroad knows that after an arduous time. in a foreign country he will go on a board. Would it not be reasonable to widen this Subsection to include that case? Mention has been made about Indian employees and I think these people are just as important.

The Solicitor-General: We feel we have drawn the line fairly in excluding the employee. After all, it is the employee who is the. static person generally. The directors move about more and we feel it would not be right to ask us to go further than we have done in that Subsection. With regard to the provident scheme, in the case of those we exempt,


we do not affect them at all. With regard to the payments of the employer towards the provident fund, they do not qualify by way of deduction as payment to the employee unless the provident fund can be said to come within the scope either of those which are statutory superannuation schemes or schemes approved under Section 32 of the 1921 Act. We leave the small provident schemes in the same position as they were before the Act.

Mr. Donovan: May I respond to the invitation of the hon. Member for Chippenham (Mr. Eccles). The reason why directors are not included in Subsection (4) is a rather technical one. It is that directors, although they may do all their work outside the United Kingdom provided they are directors of an English company, are assessable under Schedule E although they reside and work outside this country. There was an occasion when I took the opposite view, but I failed to persuade the House of Lords to let these directors off. That is the reason why directors are not in the Subsection.

Clause read a Second time, and added to the Bill.

Orders of the Day — NEW CLAUSE.—(Approval of retirement benefit schemes.)

(1) Subject to the provisions of the next succeeding section the Commissioners of Inland Revenue shall approve a retirement benefits scheme for the purpose of subsection (2) of the last preceding section unless it appears to them that the scheme does not fall within the said subsection (2) by reason of the fact that the main benefit afforded thereby is not such as is therein mentioned, or that, although the main benefit is such as aforesaid, the scheme fails to satisfy some one or more of the following conditions, that is to say—

(a) that that benefit will accrue only on retirement at a specified age or on earlier retirement through incapacity or on death;
(b) that the nature of the benefits afforded by the scheme is the same in relation to all the persons to whom the scheme relates;
(c) that the proportion between the value of the pensions or annuities provided for by the scheme, in so far as they are not com-mutable, and the value of all other benefits afforded thereby, including the value of so much, if any, of the said pensions or annuities as is commutable, is reasonably comparable to the proportion between the values of such benefits respectively as are usually afforded by statutory superannuation schemes;

(d) that the aggregate value of the benefits, of whatever nature, afforded by the scheme is reasonably comparable to the aggregate value of the benefits usually afforded by statutory superannuation schemes in like circumstances;
(e)that the pensions or annuities provided for by the scheme are not assignable. either in whole or in part; and
(f) that no service of a person, in whatever capacity, rendered by him while he is a controlling director of the body corporate is taken into account for any of the purposes of the scheme:

Provided that the said Commissioners may, if they think fit, having regard to the facts of the particular case, approve a scheme the main benefit afforded whereby is such as is mentioned in subsection (2) of the last preceding section notwithstanding that it may not, in one or more respects, satisfy the whole of the aforesaid conditions.

(2) Where the said Commissioners have given their approval to a scheme, they may at any time, by notice in writing to the body corporate in question, withdraw their approval on such grounds and as from such date as may be specified in the notice.

(3) In the case of a scheme in existence at the passing of this Act the main benefit afforded whereby is not then such as is mentioned in subsection (2) of the last preceding section, or which does not then satisfy the conditions specified in subsection (1) of this section, but which is so altered before the sixth day of April, nineteen hundred and forty-eight, or within such further time as the said Commissioners may allow, as to be approvable under this section, approval there of after the sixth day of April, nineteen hundred and forty-seven shall, if the said Commissioners so direct, be deemed to have had effect as from that day.— [The Solicitor-General.]

Brought up, and read the First time.

The Solicitor-General: I beg to move, "That the Clause be read a Second time."

Mr. Eccles: Again I have one or two short questions. Subsection (1, a)says:
Benefit will accrue only on retirement at a specified age…
Supposing that a scheme is approved in which the retirement age is 60, and then it happens that a man is useful to the company, which wants him to go on working. It might be—and I am not a lawyer—that he will have to retire at 60 if he is to be exempt. I would be grateful if that point were cleared up. Paragraph (d)of the same Subsection talks about "the aggregate value of benefits, of whatever nature." I am not clear what "aggregate value" means, and how it will be calculated. In regard to that Subsection in general, I assume there is no restriction on the limits


of this aggregate value—provided that the aggregate value bears a reasonable relation to the scale of salary and the length of service? Those are my three points.

The Solicitor-General: With regard to the first question, it would depend on the exact situation. Supposing he was to retire at 60 and the age was put up to 65, that would still be the specified age. There is still discretion, notwithstanding developments of that sort. The important thing is that there should be a reasonable comparison between superannuation schemes in similar circumstances and the scheme under consideration.

Clause read a Second time, and added to the Bill.

Orders of the Day — NEW CLAUSE.—(Aggregation and severance of schemes.)

(1) References in this section, in the last three preceding sections, and in the next succeeding section, to a retirement benefits scheme shall be construed in accordance with the following provisions, that is to say—

(a)references to such a scheme shall, in relation to a deed, agreement, series of agreements, or other arrangements providing for retirement or other benefits for persons of two or more classes, be construed as references to so much thereof as relates to persons of a single class, and accordingly a deed, agreement, series of agreements or other arrangements so providing shall be treated for the purposes of those sections as constituting two or more retirement benefits schemes relating respectively to the different classes;
(b) references to such a scheme include references to a deed, agreement, series of agreements, or other arrangements providing for retirement or other benefits for persons consisting of or including a director or employee, or directors or employees, of a body corporate (or, in a case falling within the preceding paragraph, to so much thereof as relates to a person or persons of any one class), notwithstanding that it or they relates or relate only to a small number of directors or employees, or to a single director or employee.

(2) For the purpose—

(a) of determining, in the case of a retirement benefits scheme which was in operation before the sixth day of April, nineteen hundred and forty-four, whether the scheme falls within subsection (2) of the last but one preceding section as respects the nature of the main benefit afforded thereby and
(b) of determining, in the case of a retirement benefits scheme submitted for the approval of the Commissioners of Inland Revenue, whether the scheme so falls and whether the conditions specified in subsection (1) of the last preceding section are satisfied,

the scheme shall be considered in conjunction with any other retirement benefits scheme or schemes subsisting in connection with the body corporate and relating to persons of the class to which the scheme in question relates, and—

(i) if the main benefit afforded by all of those schemes taken together is such as is mentioned in subsection (2) of the last but one preceding section, each of them shall be taken to fall within that subsection as respects the nature of the main benefit afforded thereby, and, if it is not, none of them shall be taken so to fall; and
(ii) if the said conditions are satisfied in the case of all of them taken together, those conditions shall be taken to be satisfied in the case of each of them, and, if not, those conditions shall be taken to be satisfied in the case of none of them.

(3) The said Commissioners may, if they think fit,—

(a) approve a part of a retirement benefits scheme; or
(b) approve such a scheme notwithstanding that, having regard to another such scheme subsisting in connection with the body corporate, the scheme in question is to be treated by virtue of the last preceding subsection as not falling within subsection (2) of the last but one preceding section or as not satisfying the conditions aforesaid;
and where under this subsection the said Commissioners approve a part of a scheme, neither subsection (1) nor subsection (2) of the first of the sections of this- Act relating to retirement or other benefits shall apply so as to cause any sum to be deemed to be income of a director or employee by reference to the provision for him of benefits afforded by that part of the scheme or of any part of such benefits.— [Mr. Dalton.]

Brought up, read the First time and Second time, and added to the Bill.

Orders of the Day — NEW CLAUSE.—(Supplementary provisions as to retirement or other benefits and application to unincorporated societies, etc.)

(1) In this and the last four preceding Sections, except where the context otherwise requires, the following expressions have the meanings hereby respectively assigned to them, that is to say—
controlling director" means a director of a company, the directors whereof have a controlling interest therein, who is the beneficial owner of, or able, either directly or through the medium of other companies or by any other indirect means, to control, more than five per cent. of the ordinary share capital of the company, and for the purposes of this definition the expressions "company" and "ordinary share capital" have the same meanings as they have for the purposes of the Fourth Schedule to the Finance Act, 1937;
director"means—

(a) in relation to a body corporate the affairs whereof are managed by a board of directors or similar body, a member of that board or similar body;


(b) in relation to a body corporate the affairs whereof are managed by a single director or similar person, that director or person;
(c)in relation to a body corporate the affairs whereof are managed by the members themselves, a member of the body corporate, and includes any person who is to be or has been a director;
employee," in relation to a body corporate, includes any person taking part in the management of the affairs of the body corporate who is not a director, and includes a person who is to be or has been an employee;
excepted provident fund or staff assurance scheme or other similar scheme" means so much as relates to persons remunerated at a rate of two thousand pounds a year, or at a less rate, of any retirement benefits scheme as to which the following conditions are satisfied, that is to say—

(a)that the sums paid by the body corporate pursuant to the scheme in question in respect of any person for any period do not exceed ten per cent. of his remuneration for that period and do not exceed one hundred pounds in the case of a period of a year or a correspondingly less or greater amount in the case of a shorter or longer period; and
(b) that no other retirement benefits scheme which relates to employees of the body corporate who are of the class to which the scheme in question relates, and who are remunerated as aforesaid, is subsisting for the time being, or, if there is any such other scheme subsisting that it (so far as it relates to persons remunerated as aforesaid) and the scheme in question taken together satisfy the requirement specified in paragraph (a) of this definition:
retirement or other benefit," means any pension, annuity, lump sum, gratuity or other like benefit to be given on retirement, or in anticipation of retirement, or, in connection with past service, after retirement, or to be given on or in anticipation of or in connection with any change in the nature of the service of the person in question, except that it does not include any pension, annuity, lump sum, gratuity or other like benefit which is to be afforded solely by reason of the death or disability of a person occurring during his service. and for to other reason;
service" means service as an employee or director of the body corporate in question, and "retirement" shall be construed accordingly;
statutory superannuation scheme" means a scheme set up by or approved under any enactment relating to superannuation or set up by or approved under any regulations relating to superannuation made under any enactment by any Minister or government department, and for the purposes of this definition, the expressions "enactment," "Minister" and "government department" include respectively an enactment of the Parliament of Northern Ireland,

a Northern Ireland Minister and a Northern Ireland government department.

(2) Where an alteration has been made in a retirement benefits scheme at any time after the fifth day of April, nineteen hundred and forty-seven, the scheme shall, for the purposes of this and the last four preceding Sections be deemed to have become a new scheme coming into being on the date of the alteration:
Provided that this Subsection shall not apply to an alteration approved by the Commissioners of Inland Revenue.

(3) Any reference in this or the last four preceding Sections to the provision for a person of retirement or other benefits includes a reference to the provision of benefits payable to that person's spouse, children, dependants or personal representatives, and any reference therein to the provision for a person of a pension or annuity for his life includes a reference to the provision (either in addition or as an alternative to the pension or annuity payable for his life) of a pension or annuity payable to that person's spouse or to any child or dependant of that person for the life of the spouse, child or dependant.

(4) Any reference in this or the last four preceding Sections to the provision of retirement or other benefits, or of a pension or annuity, by a body corporate includes a reference to the provision thereof by means of a contract with a third person.

(5) It shall be the duty of a body corporate—

(a) to deliver to the surveyor, within the time specified in this Subsection particulars of any retirement benefits scheme subsisting in connection with the body corporate on the sixth day of April, nineteen hundred and forty-seven, or coming into being after that date. other than a scheme referred to in subsection (1) of the second of the Sections f this Act relating to retirement or other benefits, and
(b) when required so to do by notice given by the surveyor, to furnish within the time limited by the notice such further particulars as he may require with regard to any retirement benefits scheme subsisting in connection with the body corporate or to the persons to whom it relates,
and the provisions of Section one hundred and seven of the Income Tax Act, 1918 (which relates to failure to deliver lists, declarations and statements), shall apply in relation to the particulars required to be delivered by or under this Subsection as they apply in relation to any list, declaration or statement required to be delivered by any such notice as is referred to in that Section.

The time for delivery of particulars under paragraph (a) of this Subsection shall be—

(a) in the case of a scheme that came into being before the passing of this Act, six months beginning with the date of the passing of this Act;
(b) in the case of a scheme coming into being after the passing of this Act, three months beginning with the date of its coming into being.

(6) This and the last four preceding Sections shall apply in relation to unincorporated


societies or other bodies as they apply in relation to bodies corporate:

Provided that the reference in this Subsection to unincorporated societies or other bodies shall be deemed not to include a reference to individuals in partnership.—[The Solicitor-General.]

Brought up, and read the First time.

The Solicitor-General: I beg to move, "That the Clause be read a Second time."

Mr. Eccles: Paragraph (a)sets certain limits on the payments in and out of provident schemes, and I want to suggest these limits are rather low, especially where a company takes on a man of a certain age, say 50. If the employer is allowed to contribute only 10 per cent. of a man's salary, it would be very hard to provide a fund from which he really could get a substantial and satisfactory pension. I think it would be right to raise that limit from, say, 10 per cent. to 20 per cent. and raise the limit from £100 to £500. I hope that that will be considered; otherwise, it will be difficult to deal with the kind of many of whom the hon. and gallant Member for Antrim (Major Haughton) was talking—the man who moves about between different companies. It is to the advantage of industry that men of skill and experience should change their jobs occasionally. If he comes into a company at the age of, say, 50, and it is not possible to make him a respectable pension, he might well be deterred from giving the best of his services.

Mr. C. Williams: I should like to support my hon. Friend in the point he has raised, which is of real value. This figure of £100 a year does seem to me, in view of the present deterioration of the £,and the tendency in many cases to raise salaries, to be too low. I think some support should be given to my hon. Friend, who has worked this out, and I would ask the right hon. Gentleman, if we cannot get this now, at any rate that he should look into the matter to see whether in the future some concession could not be made more in keeping with the times than this figure of £100.

The Solicitor-General: I must confess that, even after listening to these two speeches, our view is that the limits have been put at the right figures. The intention is generally to include the smaller

provident schemes. If it is desired to deal with larger figures, the right course would be that a superannuation scheme should be brought into effect which would comply with the conditions and qualify for approval under the terms of the scheme. I would point out again that nothing in the way of a voluntary payment is touched, and, therefore, that any voluntary payment, in circumstances concerning an elderly employee for example, would not be affected. Inasmuch as this proviso is intended to deal with the small provident or endowment schemes we have fixed the limit, I think, at the correct figure. I have heard. what the hon. Gentleman said, and what the future may bring forth no one knows, but at the moment, I think, we have fixed the right figure.

Clause read a Second time, and added to the Bill.

12.43 a.m.

Mr. Stanley: I beg to move, "That further consideration of the Bill, as amended, be adjourned." I think this. would be a convenient time to ask the Government their intentions.
We have made considerable progress —[Interruption.]Perhaps the hon. Member for West Fife (Mr. Gallacher) will allow the Chancellor of the Exchequer to answer for himself. I know he expects in a short time to be occupying that position, but until that moment arrives he might allow the right hon. Gentleman to enjoy temporarily, at least, the benefits of independence. Other hon. Members will think that we have made considerable progress. We have dealt already, as far as I can see, with the major matters coming up on Report stage, and, as far as my hon. Friends are concerned, I think we can safely give this guarantee —that, were we to break off now, we could finish the Bill at a reasonable hour on the second day of the Report stage. I am assuming that there is no particular point on which hon. Members opposite wish to talk an abnormally long time. That, of course, I cannot control. I must leave that to the right hon. Gentleman. But, as far as we are concerned, we feel that it should be easily possible to accomplish that. In view of that, and having reached the end of a particular block of new Clauses, we would suggest


that this is the appropriate moment at which to adjourn the Debate.

Mr. Dalton: Perhaps, I might be allowed to discuss in a friendly way what has just been suggested. I hope that the right hon. Gentleman is right in saying that all the major matters likely to lead to long discussion are now past. I had thought that there was not much left in the new Clauses that would occupy any time. I had hoped that if we had the kind of response suggested by the right hon. Gentleman, we ought to finish the remainder of the new Clauses. I had thought it would have been convenient to do that tonight, leaving the rest of the Amendments for the last day. Does the right hon. Gentleman feel strongly between one course and the other?

Mr. Stanley: I do feel rather strongly that the course I suggest would be most convenient, for the reason that, so far as I can see, there is rather more in the rest of the new Clauses than there is in the Amendments. If we spend an hour or two in finishing the new Clauses that would only result in an exceptionally short sitting on the second day, and we might find that we would do our work much more evenly if we adjourn now and finish the Bill at the next sitting.

Mr. Dalton: Guarantees are relative things—does the right hon. Gentleman want to go beyond eleven o'clock? This Debate does not often run to one o'clock in the morning.

Mr. Stanley: I should hope it would be earlier than that.

Mr. Dalton: If that is so, the right hon. Gentleman has good reason for it, and I think my hon. Friends will fall in with it. We have had a lengthy Debate, and I had to wait a long time for my dinner. No doubt we can do it all right in the time, and I am prepared to accept the suggestion that we should now adjourn.

Further consideration of the Bill, as amended, adjourned.

Bill, as amended (in Committee and on re-committal), to be further considered this day.

Orders of the Day — ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Mr. Pearson.]

Adjourned accordingly at Twelve minutes to One o'Clock.